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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

Why So Sure an HSA Plan Will be Offered?

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Question: The Silver HSA plan was expressly eliminated at Covered California’s May 8, 2013 meeting “because this will interfere with the calculation of subsidies”, and the same logic would apply to Bronze plans. Since “the board was disinclined to allow alternate plan designs in the individual market” we see in the “Final” CC Health Plans Booklet only a non-HSA Bronze plan. So aren’t HSA plans officially dead now, and if not, why didn’t Covered California mention them in any of their late May press releases? (Quotes from Health Access Blog)

Answer: I’m not entirely sure what the Exchange Board might eventually do about the HSA plan, but I sense some wish-fulfillment in your question. Consumer advocates say that HSA plans are unsuitable for low-income consumers. I agree. Being underinsured is a chief cause of financial disaster for families without the financial resources to deal with large out-of-pocket expenses. The IRS sets minimum deductible levels for HSA-compatible health plans to give users of the HSA tax break “skin in the game”. On the other side of the coin, ACA cost-sharing reductions help low-income people (less than 250% FPL) cover the cost of health insurance deductibles, co-payment and coinsurance bills. This same demographic may be attracted to HSAs because they are relatively cheap, but the problem is that the plan variation caused by reduced cost-sharing is no longer HSA-qualified. The bottom line is that HSA plans cannot be purchased by those with incomes below 250% FPL. - those most vulnerable to catastrophic financial loss. There is still a place for the HSA plan - a financially sound method of funding healthcare for many Californians. Covered California will pass up on a substantial portion of the non-subsidized individual health insurance market if they do not offer an HSA plan.

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With the CA exchange now open, there is a variety of providers offering Bronze HSA plans with (sadly) VERY high $4500-5000 deductibles - far above the 2103 $1250 minimum for a HDHP.

No matter how cheap it might be with subsidies, for many that high annual deductible reduces it’s value to near the ‘Catastrophic’ category at best.

I feel in a real squeeze. I have an opportunity to re-fund my dwindling HSA with a once-in-a-lifetime option to directly transfer funds from my IRA to my HSA without penalty which makes imminent financial sense. But the Bronze HSA plan otherwise offers me little real-world benefit other than the 3 allowed annual Primary Care visits and Preventative Services. It may be I need to opt for a Bronze HSA this first year to do that, then upgrade to Silver in 2015 to get truly meaningful coverage.

For small businesses in CA, there is 1 Silver SHOP plan that’s HSA compatible with a combined deductible of $1500. It’s a shame that they can’t offer something comparable to Individuals.

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