I do in-house corporate work that pays well, helps with my retirement, and helps provide health insurance for our entire family.

As we are all (relatively) young and healthy, we recently made the voluntary switch to an HSA plan. Under our HSA plan, my employer contributes roughly $110.00 each month for my family and pays the other premium amounts in full. Each month, I contribute an additional $450.00(ish) to our HSA in order to max out the current family allowable contribution of $6,750.00. Each year, we have a family deductible (in-network) of $4,000. Once we hit this amount, all other services are covered, in full, by our insurance provider without anything else out of pocket. So essentially, the amount of money in my family’s HSA each year is more than enough to cover our maximum deductible without us having to dig further into our pockets. A quick side note about HSA’s — money contributed to an HSA reduces your overall taxable income. So essentially, by being able to contribute the maximum amount to our HSA, we can essentially “lower” our overall income and owe fewer taxes.

In addition to this fairly nice setup, thanks to the Affordable Care Act (otherwise known as the ACA or Obamacare) our wellness exams and routine childhood screenings (hello vaccinations!) do not cost anything out of pocket. Also thanks to the ACA, I know that regardless of my policy, all maternity care and birth control is included automatically — which is a nice assurance should we choose to one day give Holland a sibling or chose to prevent that from happening.

So basically my family is very blessed. We make enough money to cover our healthcare costs, pay our bills, pay down our debt, save for retirement, donate to our favorite charities on a monthly basis, and still occasionally spoil ourselves with new running shoes, various household projects, or date nights.  We are not living paycheck to paycheck and if something terrible happened, we have enough savings readily available to continue our standard of living for months if necessary. In other words, our family doesn’t need anymore help in this arena. But so many more families make less money, have less than stellar insurance plans, and ARE living month to month.

Those families need to be helped by any insurance reform. Not my family. And yet… the proposed American Health Care Act (“AHCA”) doesn’t help them. It hurts them.

Under the AHCA:

• HSA Contribution Amount: The HSA Contribution limit for my family would rise from $6,750 to $13,100. This means that we could further reduce our overall taxable income by an additional $6,350. That’s a lot of money, especially when you consider that as our incomes continue to grow, it could essentially change our tax bracket. However, this deduction will not benefit people who either cannot afford to deduct $13,100 out of their earnings, pre-tax, each year or help people who are not well served by HSAs. HSAs can only be used in conjunction with high-deductible plans (not co-pay plans) and thus, require the insured to have cash up front to pay for medical expenses unless or until the high deductible is reached. My family’s high deductible of $4,000 is really not high. A lot of these plans average deductibles of nearly $3,000 per person and thus closer to $9,000 for a family of three. This is a lot of money for the average American family, especially those who cannot afford to take maximum HSA witholdings. There are other drawbacks that make HSA/high deductible plans impossible for a lot of families (no prescription drug co-pay coverage for instance), so while this part of the GOP plan would technically benefit my family, we are likely the exception and not the rule. 

• Tax Credits: For persons who are independently buying their insurance (i.e., using a marketplace) tax credits will be given to help cover the costs of obtaining private health insurance (ranging from $2,000 to $4,000 based primarily on age). Importantly, geography will no longer be a factor in determining what size of a tax credit you are given (health care premiums vary greatly depending on the state in which it is purchased). While our family wouldn’t currently be eligible for this benefit because our insurance is through my employer, it is interesting to note that, unlike the tax credits under the ACA (called subsidies in that plan), if we did have to enter the marketplace to obtain insurance we would qualify for these credits despite having high incomes. Under the AHCA, individuals making up to $75,000 or married couples filing jointly who make up to $150,000 are eligible for these tax credits. Now, there is some rationale for why the AHCA does this and I encourage you to read about it, however despite the good intentions, the result will likely be more expensive premiums for everyone. 

• Medicaid Expansion: The ACA Medicaid expansion, enacted by 31 states and D.C., has allowed millions of uninsured Americans to gain coverage. Prior to the ACA, Medicaid was only available to certain qualified low-income families, pregnant women, children, and the disabled. Under the ACA, you could qualify for Medicaid coverage if you made up to 138% of the federal poverty level. Under the ACHA, people would no longer be able to enroll in the expansion after 2020 and anyone who was included in the expansion who let their coverage lapse (say, because of a job loss or other financial crisis such as a divorce) would be prevented from re-enrolling in the future. These persons would therefore be thrown back into the marketplace to find coverage and would only have the smaller tax credits (above) to help and would still have to face the new penalties (below).

• Penalties for No Coverage: Under the ACA there is a mandate that requires everyone to buy insurance. This exist because costs go down when the pool is bigger. In other words, if healthy people who aren’t using benefits are also paying into the system, then the costs for everyone are lowered. (The mandate also helps pay for other portions of ACA such as no lifetime insurance caps, required coverage on parent plans until 26, no ban for previous conditions, etc.) While there are exemptions from the tax penalty mandate under the ACA, the fee itself is $695 per adult and $347.50 per child (or $2,085 for a family). Under the AHCA, this fee is removed and coverage is no longer mandated. However, if your coverage lapses for any reason for 63 days or longer, then you will have to pay your new insurer a penalty of 30% of the premium. Over 30 million working-age adults have reported gaps in insurance coverage that exceed 63 days. While this likely isn’t a concern for my family because we have employer provided coverage and would likely be able to afford COBRA until we could find a suitable replacement, this is not the case for millions of Americans. Moreover, the 30% penalty will, for most people, be a much larger expense than the tax penalty of the ACA. Overall, this penalty does not encourage people to return to the marketplace upon suffering a lapse, and according to the CBO (a nonpartisan group), this would, in part, lead to a reduction of coverage for nearly 24 million people.