How Do Marketplace Plans Differ From Others; Will Cost-Sharing Subsidies Affect My HSA; Who Pays The Penalty For An Adult Child? - Kaiser Health News
Q. Because my income is between 150 and 200 percent of the federal poverty level for a family of two, I qualified for premium tax credits and cost-sharing reductions on a silver level plan. The plan I picked, with an annual family deductible of $3,000 and an out-of-pocket spending cap of $12,700, can link to a health savings account. With my cost-sharing reduction, the family deductible dropped to $800 and the annual out-of-pocket maximum dropped to $2,600. My question: How can this plan still meet the IRS requirements for HSA-qualified plans?
A. It doesn't. As you know, people with incomes up to 250 percent of the federal poverty level (currently $38,775 for a couple) may qualify for cost-sharing subsidies on the health insurance exchanges that reduce their out-of-pocket health care costs, including deductibles, copayments and their annual maximum out-of-pocket limit. The cost-sharing subsidies are only available to people who buy a silver-level plan. (Those with incomes up to 400 percent of poverty may also qualify for premium tax credits.)
Health savings accounts can be used to save money tax free for medical expenses, but they have to be linked to a health plan that meets certain federal standards, including a family deductible of at least $2,500 and an out-of-pocket maximum spending limit of $12,700 in 2014.
If the cost-sharing subsidies would reduce the deductible to below the minimum for HSA-qualified plans, people generally won't be able to contribute to an HSA in those circumstances, according to a Treasury Department spokesperson.
"For purposes of a health savings account, the cost-sharing reduction is considered in determining the deductible of the plan," the spokesperson said. You could, however, consider buying the plan without the cost-sharing subsidies and then be eligible to contribute to an HSA, according to guidance from the Centers for Medicare & Medicaid Services. (See question 8.)
Q. Because my income is between 150 and 200 percent of the federal poverty level for a family of two, I qualified for premium tax credits and cost-sharing reductions on a silver level plan. The plan I picked, with an annual family deductible of $3,000 and an out-of-pocket spending cap of $12,700, can link to a health savings account. With my cost-sharing reduction, the family deductible dropped to $800 and the annual out-of-pocket maximum dropped to $2,600. My question: How can this plan still meet the IRS requirements for HSA-qualified plans?
A. It doesn't. As you know, people with incomes up to 250 percent of the federal poverty level (currently $38,775 for a couple) may qualify for cost-sharing subsidies on the health insurance exchanges that reduce their out-of-pocket health care costs, including deductibles, copayments and their annual maximum out-of-pocket limit. The cost-sharing subsidies are only available to people who buy a silver-level plan. (Those with incomes up to 400 percent of poverty may also qualify for premium tax credits.)
Health savings accounts can be used to save money tax free for medical expenses, but they have to be linked to a health plan that meets certain federal standards, including a family deductible of at least $2,500 and an out-of-pocket maximum spending limit of $12,700 in 2014.
If the cost-sharing subsidies would reduce the deductible to below the minimum for HSA-qualified plans, people generally won't be able to contribute to an HSA in those circumstances, according to a Treasury Department spokesperson.
"For purposes of a health savings account, the cost-sharing reduction is considered in determining the deductible of the plan," the spokesperson said. You could, however, consider buying the plan without the cost-sharing subsidies and then be eligible to contribute to an HSA, according to guidance from the Centers for Medicare & Medicaid Services. (See question 8.)
