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Health Plans Dropping Out-of-Pocket Cost Waivers for COVID-19 Treatment

May 4, 2021 at 7:48 pm

COVID-19 treatment As the light at the end of the pandemic tunnel gets brighter, more health insurers are ceasing to offer cost-sharing waivers for COVID-19 treatment.

After legislation was enacted in 2020 that required health insurance companies to cover COVID-19 tests and vaccines, many insurers voluntarily waived all deductibles, copayments and other costs for insured patients who fell ill with COVID-19 and needed hospital care, doctor visits, medications or other treatment.

Not all health insurers extended these waivers to their enrollees, but many did.

Insurers are still required to provide free COVID-19 testing and vaccinations to their enrollees. That’s because federal guidance requires them to waive such costs.

Also, guidance issued in February after President Joe Biden assumed office, reinforced the Trump administration rule about waiving cost-sharing for testing. Biden’s guidance took an extra step, saying that it applies even in situations in which an asymptomatic person wants a test before traveling or seeing a relative.

Almost 90% of individual and group health plans enrollees were in plans that waived cost-sharing for COVID-19 treatment, according to the Peterson-KFF Health System Tracker.

What insurers are now doing

However, starting in late 2020, more and more insurers have quietly been dropping those waivers. For example:

  • UnitedHealthcare started curtailing its waivers in November.
  • Anthem stopped its cost-sharing waivers on Jan. 31.
  • Cigna stopped offering cost-sharing waivers for COVID-19 treatment on Feb. 15.
  • Aetna ceased offering deductible-free inpatient COVID-19 treatment waivers on Feb. 28.

Not all insurers are doing this though. Blue Cross and Blue Shield of Minnesota extended eligibility for telehealth benefits and COVID-19 treatment waivers through the end of 2021.  Humana, meanwhile, has left the cost-sharing waiver in place for Medicare Advantage members, but dropped it on Jan. 1 for those in job-based group plans.

A study by the Peterson Center on Healthcare and the Kaiser Family Foundation released in November 2020, found that 88% of Americans who have health coverage — including employer-sponsored health plans and individual plans purchased on exchanges — had policies that waived cost-sharing for COVID-19 treatment.

Despite the fact that vaccines are rolling out quickly across the country and in light of a significant percentage of people who are hesitant to get vaccinated for COVID-19, the coronavirus is expected to be a presence in society for some time to come. And that means people will contract it and get sick.

There are also concerns about mutant strains that have developed in South Africa and Brazil, and possibly in India during the massive outbreak in April.

The takeaway

You may want to check with your group health plans to see if they have waived any cost-sharing for COVID treatment, and have since dropped or are planning to drop it.

You should meet with your employees or send them a memo explaining any impending changes for them if they have a health plan that is ending or has ended waivers.

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Put Money into an HSA instead of a 401(k) After Employer Matching: Report

April 27, 2021 at 7:19 pm

health savings One of the main recommendations for employees with 401(k) plans is that they should contribute at least enough to their plan every paycheck to ensure they receive the maximum they can in their employer’s matching contributions.

But a new study by Willis Towers Watson recommends that younger, healthier workers should divert savings to their health savings account from their 401(k) after capping out employer matching instead of continuing to put money into their retirement plan.

The report reasons that if they do this, they can get more bang for their buck when they use their HSAs to pay for future medical expenses.

That’s because HSAs can be kept for life and the money they’ve accumulated in them can be used to pay for medical expenses whenever they need them, including in retirement. And the moneys used in HSAs to pay for those expenses are not taxed when they are withdrawn, unlike 401(k)s, the funds of which are subject to federal income tax when withdrawn

The benefits of HSAs

With HSAs:

  • Pretax contributions, gains from investment, and withdrawals used for qualified medical expenses are exempt from federal and most state taxes.
  • Any unused balance is carried over to the next year.
  • Funds never expire.
  • Unused funds can be passed on to a beneficiary after death.
  • After turning 65, account holders can withdraw money for any purpose. However, if those funds are not use for a bona fide medical expense, they are taxed as income.

No other retirement savings vehicle has the same tax advantages as an HSA, so a dollar saved in an HSA can be worth significantly more than an unmatched dollar saved in a 401(k), according to Willis Towers Watson. Some employers will match a portion of workers’ HSA contributions or seed their accounts with money to encourage participation.

That said, HSAs won’t outperform funds that are matched partly or fully by an employer, according to the report.

Willis Towers Watson said that those tax-free dollars and withdrawals can help pay for health care when we are likely to use it most: in retirement.

Men who retire at 65 with an average life expectancy of 85 would spend about $140,000 out of pocket for medical costs, and woman who retires at the same age and lives to 87 would spend an average of $159,000, according to the research.

The HSA pitch

HSAs can only be used in conjunction with a high-deductible health plan. When HSAs were first introduced, they did not have investment options for the money in the accounts, but as they have grown in popularity over the years, many HSAs now have evolved to essentially have the same investment choices as a 401(k).

HSAs have rules about how much of the balance can be invested. They will typically require that the first $1,000 in the account to be held in cash, and anything above that can be invested to help the funds grow over time.

In 2021, workers can contribute a maximum of $3,600 to their individual HSA account and $7,200 to a family coverage account.

If you are offering your workers high-deductible health plans with matching HSAs, and if you also provide a 401(k) and match part of the contributions, you may want to consider sharing this information with them to help them make informed choices on where to park their money for future use.

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