Short Term Health Insurance, HSA eligibility

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kamason86
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Short Term Health Insurance, HSA eligibility

Post by kamason86 » Wed Feb 21, 2018 3:46 pm

Hi all,

ACA seems to be sticking around and the rates keep going up so I decided against having insurance and I'm looking at other options. I just saw a news article saying Trump has proposed loosening up the regulations on short term health insurance from the current 90 day limit to allow for a year long coverage. Are current short term health plans HSA eligible? If not why? IRS doesn't seem to preclude them as long as they conform to the deductible regulations. I found the company National General currently will sell 4 - 90 day policies all at once effectively making it almost year round coverage. Not guaranteed to renew and no preventative services but at least affordable. I most likely will have to pay the fine next year for going but depending on the affordability calculation might be exempt.

Any idea why these plans wouldn't be HSA eligible? I'm sort of on the fence weather to buy but having that deduction would help me pull the trigger on at least some sort of coverage.

Thanks

curmudgeon
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Re: Short Term Health Insurance, HSA eligibility

Post by curmudgeon » Wed Feb 21, 2018 5:57 pm

I'm not an expert, but I'm afraid any short term policy is unlikely to be HSA eligible. The reason is that there are a bunch of funky restrictions around HSA; it's not just that you have to pay at least the first $X out of pocket, but there also has to be a maximum out-of-pocket limit that is no more than $Y. It doesn't really make logical sense, but that's the rules.

If you are under a certain age (30?) you may be eligible to buy a "catastrophic" policy, which should be somewhat lower cost if available.

It can be a tough spot these days if your income is just above the ACA subsidy "cliff", given the way ACA and other factors have driven rates up. Another possibility to consider would be the "health care sharing ministry" model, but those have a lot of restrictions and limitations.

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MP123
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Re: Short Term Health Insurance, HSA eligibility

Post by MP123 » Wed Feb 21, 2018 6:14 pm

curmudgeon wrote:
Wed Feb 21, 2018 5:57 pm
I'm not an expert, but I'm afraid any short term policy is unlikely to be HSA eligible. The reason is that there are a bunch of funky restrictions around HSA; it's not just that you have to pay at least the first $X out of pocket, but there also has to be a maximum out-of-pocket limit that is no more than $Y. It doesn't really make logical sense, but that's the rules.
And bizarrely: the maximum out of pocket for an ACA HDHP (which qualifies for an HSA account) is $13,300. The maximum for any ACA plan is $14,700. So for 2018 there are some very high deductible plans that are too high to be high deductible plans for HSA purposes.

Make sense? Didn't think so...

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LadyGeek
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Re: Short Term Health Insurance, HSA eligibility

Post by LadyGeek » Wed Feb 21, 2018 7:56 pm

kamason86 wrote:
Wed Feb 21, 2018 3:46 pm
I just saw a news article saying Trump has proposed loosening up the regulations on short term health insurance from the current 90 day limit to allow for a year long coverage.
As a reminder, proposed legislation (what "might" happen) is off-topic. Here's why: Political comments and proposed tax plan remain off-topic

The main points are to (1) eliminate contentious disagreements that result from these discussions and (2) keep investors from making bad decisions. Proposed regulations change many times between the time they're introduced and signed into law.

The best approach is to make your decision based on current law. If / when the law changes make a decision at that time.
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DeerRunner
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Re: Short Term Health Insurance, HSA eligibility

Post by DeerRunner » Tue May 15, 2018 1:40 pm

kamason86 wrote:
Wed Feb 21, 2018 3:46 pm
Hi all,

ACA seems to be sticking around and the rates keep going up so I decided against having insurance and I'm looking at other options. I just saw a news article saying Trump has proposed loosening up the regulations on short term health insurance from the current 90 day limit to allow for a year long coverage. Are current short term health plans HSA eligible? If not why? IRS doesn't seem to preclude them as long as they conform to the deductible regulations. I found the company National General currently will sell 4 - 90 day policies all at once effectively making it almost year round coverage. Not guaranteed to renew and no preventative services but at least affordable. I most likely will have to pay the fine next year for going but depending on the affordability calculation might be exempt.

Any idea why these plans wouldn't be HSA eligible? I'm sort of on the fence weather to buy but having that deduction would help me pull the trigger on at least some sort of coverage.

Thanks
I'm in a similar situation. My wife and I are both contractors, and we make too much for a subsidy. OTOH a Bronze plan for $1300 a month and a $10k deductable seems ridiculous. This is for a family of four. We can get a short terms plan with a much lower deductable at half the cost or more. Only catch is these plans have maximums, $1mil is normal. Some states let you sign up for them back to back, so we could get 6 months of coverage. After that we need to decide what to do next.

Keep in mind you only pay the fine for not having an ACA approved plan if the cheapest (bronze) plan is less then 8% of your household income.

https://www.irs.gov/affordable-care-act ... -exemption

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Pajamas
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Re: Short Term Health Insurance, HSA eligibility

Post by Pajamas » Tue May 15, 2018 2:08 pm

EDIT: Gee, I just realized that this thread is old, but I'll leave my comment:
Some short-term plans are HSA eligible. They are often sold as a package.

It's okay to go choose to go without health coverage as long as you can afford to self-insure. However, don't fool yourself into thinking that a short-term policy will prevent financial ruin.

There are good reasons short-term coverage is so inexpensive and readily available. It is not a good substitute for health coverage and should only be considered a last resort.

Short-term coverage is very limited. The plans generally don't include preventive care, prescriptions, and pre-existing conditions, for starters. Think about what would happen if you had a stroke during the first 90 day policy. Anything related to the stroke including subsequent strokes would not be covered after the first 90 day period. What would happen if you needed an expensive medication, one that costs $300k a year or more?

DeerRunner
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Re: Short Term Health Insurance, HSA eligibility

Post by DeerRunner » Tue May 15, 2018 2:22 pm

Not saying a short term plan is the way to go, but to address your points;

-The price of preventive care, prescriptions, etc... would still be less than the bronze plan. A decent short term plan is about $700 less a month the the bronze plan.

-In my state, you can get two back to back 90 day short term policies (so 6 months). After 6 months, we will have to find another solution. Maybe one solution is my wife or I become employees.

-About that expensive medication scenario, these plans have coverage up to $1mil after you meet your deductable and out of pocket max. For about $450 a month for a family of 4 I can get a policy with a $2500 deduct and $5k out of pocket max
In my mind, the biggest risk with these is if you need more than $1mil of coverage.

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MP123
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Re: Short Term Health Insurance, HSA eligibility

Post by MP123 » Tue May 15, 2018 2:38 pm

DeerRunner wrote:
Tue May 15, 2018 2:22 pm
In my mind, the biggest risk with these is if you need more than $1mil of coverage.
Also consider that you won't be covered for things that the insurer decides are pre-exisiting conditions. And since each policy is only good for 90 days there's a lot of opportunity for that to occur.

DeerRunner
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Re: Short Term Health Insurance, HSA eligibility

Post by DeerRunner » Tue May 15, 2018 2:47 pm

I was just thinking about the pre-existing thing. Short of being in an accident, couldn't any number of things be deemed pre-existing? Cancers, heart problems, etc...

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dm200
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Re: Short Term Health Insurance, HSA eligibility

Post by dm200 » Tue May 15, 2018 2:52 pm

kamason86 wrote:
Wed Feb 21, 2018 3:46 pm
Hi all,

ACA seems to be sticking around and the rates keep going up so I decided against having insurance and I'm looking at other options. I just saw a news article saying Trump has proposed loosening up the regulations on short term health insurance from the current 90 day limit to allow for a year long coverage. Are current short term health plans HSA eligible? If not why? IRS doesn't seem to preclude them as long as they conform to the deductible regulations. I found the company National General currently will sell 4 - 90 day policies all at once effectively making it almost year round coverage. Not guaranteed to renew and no preventative services but at least affordable. I most likely will have to pay the fine next year for going but depending on the affordability calculation might be exempt.

Any idea why these plans wouldn't be HSA eligible? I'm sort of on the fence weather to buy but having that deduction would help me pull the trigger on at least some sort of coverage.

Thanks
Apparently, there may be a few ACA policies in some areas that are not proposing increases..

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MP123
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Re: Short Term Health Insurance, HSA eligibility

Post by MP123 » Tue May 15, 2018 2:58 pm

DeerRunner wrote:
Tue May 15, 2018 2:47 pm
I was just thinking about the pre-existing thing. Short of being in an accident, couldn't any number of things be deemed pre-existing? Cancers, heart problems, etc...
Yes, along with chronic and costly but not life threatening things too. One good thing about ACA plans is they can't exclude coverage for pre-existing conditions. Of course you pay for that...

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dm200
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Re: Short Term Health Insurance, HSA eligibility

Post by dm200 » Tue May 15, 2018 3:00 pm

MP123 wrote:
Tue May 15, 2018 2:58 pm
DeerRunner wrote:
Tue May 15, 2018 2:47 pm
I was just thinking about the pre-existing thing. Short of being in an accident, couldn't any number of things be deemed pre-existing? Cancers, heart problems, etc...
Yes, along with chronic and costly but not life threatening things too. One good thing about ACA plans is they can't exclude coverage for pre-existing conditions. Of course you pay for that...
Yes ..

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