The Uncertain Future for HSAs in Maryland
November 9, 2017 – Introduction: In the 2016 the MD General Assembly passed the States Contraceptive Equity Act to prevent discrimination in insurance coverage for male and female contraception. That law is set to become effective on January 1, 2018, and required health benefit plans to provide coverage for male sterilization without applying a copayment, coinsurance or deductible.
In order to qualify for an HSA in 2018, you must have at least a $1,350 individual deductible or a $2,700 family deductible. The only exception to these minimum deductibles is for federally defined Preventive Care (the HSA Safe-Harbor highlighted in IRS Notice 2004-23). So, this new Maryland mandate is scheduled to effect fully insured HDHPs making them incompatible with HSAs.
- ABA (The American Bankers Association) has an HSA Advisory Council that advises member banks about matters pertaining to HSAs. With the MD Legislature’s failure to correct this matter, they are seeking alternative “fixes” – directly with the IRS (which some feel as an unlikely partner, given the President’s directive to rollback any/all birth control from the preventive care lists), with the MIA and others.
- Or, there could be an unwritten-fix offered. Consider back when the ACA first mandated coverage for kids up to age 26–but the HSA-regs only allowed HSA-monies to be used for your Section 152 tax dependents–natural/adopted/stepchildren up to age 19, and up to age 23 if they are still full-time students, unmarried, live you with, etc., etc. In that case–the IRS simply chose to not impose the new ACA 20% penalty for HSA withdrawals used to pay for the care those children received. With this current situation (facing fully insured Maryland HDHPs with HSAs) the IRS could take a similar stance.
- Maryland did try to correct this mess during the 2017 legislative session with SB 1156 and HB 1557. The Senate bill had a hearing on March 22, 2017, but the measure did not move forward.
- This does not affect any HSAs bundled with self-funded HDHPs since a deductible for a vasectomy would apply.
December 14, 2017 Update – The Maryland Bankers Association offers this update:
- While there are no immediate solutions for this issue, we believe there is support for a legislative solution to this issue in the 2018 legislative session. Yesterday, Maryland Senate Finance Committee Chair Mac Middleton held a meeting about this issue. Present at the meeting were a number of stakeholders including: health insurers CareFirst (BlueCross BlueShield) and CIGNA, the Joint Legislative Committee of the Maryland Association of Health Underwriters and the National Association of Insurance and Financial Advisors of Maryland, the Maryland Association of CPAs, the Financial Planning Association, the American Bankers Association and (others). Also present were Maryland Insurance Commissioner Al Redmer and staff, a representative from the Maryland Attorney General, Planned Parenthood of Maryland and other organizations that supported the 2016 legislation creating the Maryland Contraceptive Equity Act. In addition to ongoing discussions on the issue, a Maryland coalition of interested stakeholders has been formed to work on this issue.
We will continue to engage with the ABA, the MD Bankers Association, the (MD) Senate Finance Committee as well as our carrier partners in search of solutions for fully insured Maryland plans. If you have immediate questions, please contact your Account Manager or Sales Executive.
- 05/31/2017 MD Ins. Admin letter to the IRS
- 10/27/2017 Alegeus – Will There be HSAs in Maryland in 2018 Outside of Self-Insured Plans?
- 11/10/2017 ABA Presentation to SBA Counsel Meeting
- 11/21/2017 UHC Broker Connection Special Edition
- 12/05/2017 CareFirst Broker Flash – MD Contraceptive Equity Act
- 12/14/2017 Maryland Bankers Association Update
UPDATE: Please see our March 8, 2018 update on this topic, here: https://www.apbenefitadvisors.com/2017/12/19/uncertain-future-hsas-in-maryland/