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IRS Sets 2017 HSA Contribution Limits

Aside from a modest increase of $50 in the amount that individuals may contribute annually to their health savings accounts (HSAs) for self-only coverage, HSA-related limits for 2017 are holding firm.

In Revenue Procedure 2016-28, issued April 29, the IRS provided the inflation-adjusted HSA contribution limits effective for calendar year 2017, along with minimum deductible and maximum out-of-pocket expenses for the high-deductible health plans (HDHPs) that HSAs are coupled with.

These rate changes reflect cost-of-living adjustments, if any, and rounding rules under Internal Revenue Code Section 223.

“The contribution limits for various tax advantaged accounts for the following year are usually announced in the fall, except for HSAs, which come out in the spring,” explained Harry Sit, CEBS, who edits The Financial Buff blog. “Due to mild inflation and rounding rules, the 2017 HSA contribution limit for family coverage will stay unchanged.”

An HSA is always in an individual’s name. There are no joint HSAs, even when the HSA is linked to a family coverage HDHP and subject to the higher family coverage contribution limit.

Some employer plans include an “employee plus one” tier in addition to self-only and family coverage. An “employee plus one”—such as an eligible employee and her dependent child—would fall under the HSA family coverage limits.

Read the full article here.

Inside the Affordable Care Act’s Arizona Meltdown

When Affordable Care Act insurance marketplaces launched in fall 2013, Arizona seemed like a success. Eight insurers competed to sign up consumers, offering a wide variety of plans and some of the lowest premiums in the country.

Today, with ACA enrollment starting Nov. 1, Arizonans will find in most counties only one insurer selling exchange plans for 2017. Premiums for some plans will be more than double this year, some of the biggest increases in the nation. Only last-minute maneuvering prevented one Arizona county from becoming the first in the nation to have no exchange insurers at all.

A similar dynamic is playing out in other states’ exchanges, which are a critical centerpiece of the 2010 health law. About one-third of U.S. counties will have just one exchange insurer next year, up from 7% this year, estimates the nonprofit Kaiser Family Foundation, which studies health-care issues. In many cases, remaining insurers are seeking significant rate increases.

 look at what happened in Arizona shows problems with the design and implementation of the ACA, combined with early missteps by insurers. Some priced plans aggressively, angling for market share and betting special programs built into the law would protect them from losses. Those protections didn’t work as expected. Enrollees’ health-care expenses repeatedly overshot the projections of nearly all Arizona’s insurers. The result: a flood of red ink, then withdrawals and premium increases.

Read the full article here.

Estimates of Eligibility for ACA Coverage among the Uninsured in 2016

The Affordable Care Act (ACA) extends health insurance coverage to people who lack access to an affordable coverage option. Under the ACA, as of 2014, Medicaid coverage is extended to poor and near poor adults in states that have opted to expand eligibility, and tax credits are available for low and middle-income people who purchase coverage through a health insurance Marketplace. Millions of people have enrolled in these new coverage options, and the uninsured rate has dropped to the lowest level ever recorded.1 However, millions of others are still uninsured. Some remain ineligible for coverage, and others may be unaware of the availability of new coverage options or still find coverage unaffordable even with financial assistance.

This analysis updates national and state-by-state estimates of eligibility for ACA coverage options among those who remained uninsured. It is based on Kaiser Family Foundation estimates based on the 2016 Current Population Survey, combined with other data sources. We estimate coverage and eligibility as of 2016. An overview of the methodology underlying the analysis can be found in the Methods box at the end of the data note, and more detail is available in the Technical Appendices available here.

Background: How Does the ACA Expand Health Coverage?

The ACA fills historical gaps in Medicaid eligibility by extending Medicaid to nearly all nonelderly adults with incomes at or below 138% of the federal poverty level (FPL) ($27,821 for a family of three in 2016).2 With the June 2012 Supreme Court ruling, the Medicaid expansion essentially became optional for states, and as of July 2016, 31 states and DC had expanded Medicaid eligibility under the ACA. Under rules in place before the ACA, all states already extended public coverage to poor and low-income children, with a median income eligibility level of 255% of poverty in 2016.3 The ACA also established Health Insurance Marketplaces where individuals can purchase insurance and allows for federal tax credits for such coverage for people with incomes from 100% to 400% FPL ($20,090 to $80,360 for a family of three in 2015).4,5 Tax credits are generally only available to people who are not eligible for other coverage.

Read the full article here.

Average Premiums for Popular ACA Plans Rising 25 Percent

Insurers are raising the 2017 premiums for a popular and significant group of health plans sold through HealthCare.gov by an average of 25 percent, more than triple the percentage increase of this year’s plans, according to new government figures.

The steep increase in rates serves broadly to confirm what has become evident piecemeal in recent months: Prompted by a burden of unexpectedly sick Affordable Care Act customers, some insurers are dropping out while many remaining companies are struggling to cover their costs.

The figures, announced by federal officials Monday, injected a new round of uncertainty into the future of the insurance exchanges that are a core feature of the 2010 health-care law. Health policy experts said the rising prices and shrinking insurance options add tumult to the coming ACA enrollment season. The data immediately touched off a fresh round of criticism among the ACA’s persistent Republican congressional opponents.

In disclosing the 2017 rates, officials played down the impact of higher prices on consumers. They said that more than 8 in 10 consumers will qualify for ACA subsidies that will cushion them from the effects of more-expensive insurance. And they noted that as premiums go up, more Americans will be eligible for the tax credits.

In a conference call with reporters, two Department of Health and Human Services officials did not mention the average percentage increase in price. Instead, they briefly mentioned the smaller, 16 percent median increase — a statistic that has not been in previous years’ analyses.

Read the full article here.

Will the Administration’s Making Good on Billions of Dollars Due the Health Plans Solve Obamacare’s Exchange Problems?

Amy Goldstein at the Washington Post is out with a story reporting that the Obama administration is looking to use an obscure federal law to pay billions of dollars in Obamacare risk corridor liabilities to participating insurance companies.

You might recall that the administration was only able to pay 12.5% of what insurers were owed for 2014 under the reinsurance program designed to protect health plans from losses in the insurance exchanges. It has been assumed that payments for 2015 losses would fare no better.

The fundamental problem was that carriers who lost money did so at a rate eight times greater than the level of carriers who made money in 2014––there just wasn’t enough money coming from profitable carriers to pay the carriers losing money all that they were owed under the reinsurance scheme. When the administration said they would try to make up any deficit from other funds, Republicans put a provision in a budget bill that prohibited that.

Because these payments were not made, most insurance companies took a major hit to their bottom lines. The hit was so bad that many of the new Obamacare co-ops collapsed at least in part because of the incomplete payments.

Read the full article here.