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Readers Ask About HSAs, Infertility Treatment And The Consequences Of Not Buying Insurance

Now that the health insurance marketplaces are open and the January deadline for having health insurance is fast approaching, people want details about the available plans and access to health savings accounts, and information about penalties for not buying health insurance.

Q. Is it true that people with high expenses may not be able to set aside money in a health savings account if they are enrolled in an exchange health plan?

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Readers Ask About HSAs, Infertility Treatment And The Consequences Of Not Buying Insurance

A. It depends. Starting in January, all health plans sold on the marketplaces, sometimes called exchanges, have to meet certain standards. They all have to cover 10 “essential health benefits,” for example, and offer no more than four types of plans with varying member cost-sharing requirements: Bronze plans pay for 60 percent of covered medical expenses, on average; silver plans pay for 70 percent; gold plans, 80 percent; and platinum plans, 90 percent.

Insurers have flexibility within the health law’s framework to set different deductibles, copayments and other cost-sharing requirements. These may be compatible with the federal standards for high-deductible health plans that can be linked to a health savings account that people can use to save money tax free to cover medical expenses, says Tom Billet, a senior consultant with human resources consultant Towers Watson.

For example, in 2014, an HSA-compatible health plan must have a deductible of at least $1,250 for an individual, and the maximum annual amount that someone can be required to pay out of pocket for health care, not including premiums, will be $6,350. If an insurance carrier offers plans on the marketplaces that meet those standards, consumers can sign up and, if they choose, link their plan to a health savings account. They can often do this through the insurer.

“We don’t have specifics on what policies our members are offering on the exchanges, though it is our understanding that some plans are offering these,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, a trade group.

Q. My daughter is going through in vitro fertilization to try to become pregnant. Her health insurance doesn’t cover it, and she had to pay $18,000 out of pocket. Will the Affordable Care Act mandate that this be covered for small business or individual coverage starting in January?

A. As I mentioned above, starting in January new individual and small group plans have to cover 10 essential health benefits. The required coverage includes hospitalization, doctor visits and prescription drugs, among other things, but not treatment for infertility.

In some states, infertility treatments may be covered, however, according to Dania Palanker, senior health counsel at the National Women’s Law Center.

There are a couple of ways this could happen. To help implement the essential health benefits requirement under the law, every state was asked to designate a “benchmark” plan to serve as a reference point for coverage. Frequently states selected the largest small-group plan in the state. If that benchmark plan covers infertility treatments, then all new individual and small group plans next year will cover them as well as part of the essential health benefits.

In addition, 15 states require insurers to cover at least some types of infertility treatments in some health plans, according to Resolve, an advocacy group for infertility issues. If your daughter’s state requires coverage of IVF, individual and small group plans will cover it to the extent that state law requires it even if the state benchmark plan doesn’t cover it.

It’s critical that the daughter research exactly what’s covered, says Palanker. (Resolve provides links to state coverage requirements.) “Some states have very restrictive limits,” she says, noting that in Maryland, for example, couples must have at least a two-year history of infertility, and the patient’s eggs must be fertilized with her husband’s sperm.

Q. I am seeing rumors on Facebook that if people opt out of buying health insurance and don’t pay the penalty for not having it, the Internal Revenue Service will be able to put a lien on their home. Is it true? Could they end up facing this type of penalty?

A. It’s not true. Starting next year, most people will have to have health insurance or face a penalty of $95 or 1 percent of family income, whichever is greater. The penalty increases gradually to $695 or 2.5 percent of income in 2016.

The penalty will be treated like income tax due, says Mark Luscombe, principal federal tax analyst at CCH, a tax and business information publisher. 

Normally the IRS can garnish wages and file liens and levies to collect unpaid income taxes, but the health care law specifically prohibits those activities if people don’t pay the penalty for not having insurance, says Luscombe.

So if someone doesn’t pay the penalty, “all the IRS can do is offset the refund,” he says.

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