No HSA Compatible Plans in Covered California Individual Exchange

Update: According to Michael Lujan at Covered California yesterday, the exchange will in fact have HSA plans available in both the Individual and SHOP exchanges.  This information contradicts earlier information from the exchange which was the basis for this blog post.

Word out is that the Covered California Individual & Family Health Exchange will not contain any HSA compatible health plans.

HSA compatible health plans are generally higher-deductible plans with some special design requirements.  HSA compatible health plans do not allow any first dollar benefit coverage (except for preventive care which is covered in full) and the drug benefit of the plan must be part of the medical benefit plan and subject to the medical deductible.  

Compatible health plans allow for the establishment and funding of a Health Savings Account (HSA) with an account provider like a bank, credit union or investment firm.  Think of the HSA as a medical IRA account.  Contributions can be tax deductible and funds can be used to pay medical expenses of the health plan as well as many expenses not part of the health plan such as dental, vision and so on.

Anyone wishing to purchase or continue an HSA compatible health plan will have to purchase a plan in the private market (if HSA plans are provided in that market).  Those eligible for subsidy from Covered California will either have to forego an HSA plan to obtain subsidy or choose to lose out on the subsidy to purchase in the private market.

I believe the logic of this move is that high deductible HSA compatible health plans offered inside of the exchange may entice individuals and families with high subsidy levels to purchase them to further reduce their premium outlay while not being able to afford the expenses of either funding an HSA or paying for services under the high deductible.


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