An extract on #instame
Participation in a qualifying HDHP is a requirement for health savings accounts and other tax-advantaged programs. A qualifying plan must have a minimum deductible and out-of-pocket maximum which the Internal Revenue Service may modify each year to reflect change in cost of living. According to the instructions for IRS form 8889, "this limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit is reached."
When a consumer purchases a health insurance policy, there is a moral hazard risk because the consumer may utilize too much medical care because the full cost of care is defrayed (i.e. he/she has a lower marginal cost for care than the open market). Advocates of Consumer-driven healthcare (CDHC) such as HDHPs operate on the premise that imprudent choices made by patients may be avoided if they are held financially responsible through high copayments and deductibles. However, in practice, studies show that HDHP may actually promote behavior such as avoiding preventive care visits and reducing much needed ambulatory care, especially for those with chronic conditions or low socioeconomic status.
To qualify for an HDHP, an individual plan must have a deductible of at least $1,300 and family plans must have a deductible of at least $2,600. An HDHPs total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) cant be more than $6,550 for an individual or $13,100 for a family (This limit doesnt apply to out-of-network services). Because of the relatively high cost of HDHPs, the increased out-of-pocket costs can be burdensome especially for low income families. As a way to try and offset the cost of care, HDHP policy holders may contribute to a health savings account (HSA) with pre-tax income. HSA contributions, unlike other tax-advantaged investment vehicles, offer a triple tax benefit tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. The maximum contribution limits policy holders may make to their HSA in 2017 are $3,400 (individual) and $6,750 (family) with a $1,000 catch-up contribution for people age 55 or older.
The number of people enrolled in HDHPs is increasing, but this is likely due to the rising cost of health care and cost-shifting to consumers not due to the fact that HDHPs necessarily provide better care.
The proposed American Health Care Act of 2017 could result in higher deductibles (or total out-of-pocket cost) to consumers and leave 23 million Americans without insurance, according to the Congressional Budget Office. The Trump Administration is proposing to nearly double the maximum HSA contribution for a family from $6,750 to $13,100 annually. An increase in HSA contribution limits will provide little benefit to the low-income households, which already find HDHPs to be less affordable in the event of a catastrophic illness. One method to entice consumers to pursue HDHPs is low- or no-cost wellness benefits, which provides the insured with better access to preventive care visits and tools at lower cost. If successful, these plans may support the ongoing shift from curative to preventive health care.