HSAs part of federal law: commandment or suggestion?

[Don Levit]

Folks:

I am curious what your thoughts are on this issue, considering there are still, I believe, a few states that do not have HSAs.

Because insurance regulation is left primarily to the states, does a state have the right to not provide for HSAs?

Or, would this state action be in violation of federal law?

Is the federal law more of a suggestion to the states on how to provide for the insurance needs of its citizens, or an obligation?

If one or the other, how can you tell the difference?

Don Levit

[leevena]

Sounds like you might be a little confused. There is no law requiring HSA's. And you are correct, the states do regulate insurance. My guess is that you are confusing the offering of insurance products with the ability to take a tax deduction. States are left to their own as to how to tax HSA contributions for STATE INCOME. Some states allow for deductions, some don't. Is this what you are asking?

[GBurns]

Tell the difference between what? Obligation and suggestion? Insurance and tax deduction?

What does the Federal Law regarding HSAs have to do with providing insurance?

Why do you think that HSAs have to do with any state providing insurance to its citizens? The nearest thing that I see to a state providing insurance to its citizens is through Medicaid etc. Are you making a connection between HSAs and Medicaid or other state public health program?

[Don Levit]

Folks:

Interesting comments.

It seems like you two are leaning more toward the legislation focusing on tax and investment policies.

I see it more as an attempt on the federal government's part to provide more health insurance options.

Is it reasonable to see this as insurance legislation, with a mandate that states make the products available?

It seems to me, that even assuming the states perceive this is insurance (federal) legislation, the states still have the authority to ignore it, at their option.

Don Levit

[leevena]

Don, you are certainly right on your observation. The govt, especially the fed, is pushing HSA's, but this is no different than when the pushed managed care model in '72 or so with the HMO act and in the late 40's when they helped benefits in general. Without the tax breaks, most benefits would have been much more difficult to implement.

As for HSA's and HRA's, they represent a significant departure from the current plans available. And to a large extent, they mirror G. Bush's conservative view of accountability and responsibility. About the only thing a state could do to stop such a movement is to withhold tax deductability of the side funds. They could try to legislate that carriers could not offer larger deductible plans, but it is too late, most states, if not all, already have such plans. And beside, it would be almost impossible to stop a carrier from developing one.

[GBurns]

Don

I have no idea what your issue is.

In any case I cannot think of any state that does not and has not always had plans available which have high deductibles. And that they had them even before MSAs which means long long before HSAs were even conceived. So I have no idea why you would think that any state would try to stop the availability of HDHPs if they did not already long have them and even if they could somehow stop insurers fron developing and offering them.

The HSA legislation neither mandated nor suggested anything to do with insurance. The insurance issue was either already long available or would be made available in response to market demand. The legislation was directed at the consumer as an inducement to the consumer and as a replacement to the failed MSAs in response to intense lobbying by special interests.

The HSA legislation was never an insurance issue, it always was a tax issue.

[Don Levit]

George:

From following the posts in this particular section, I have learned that not all of the states have plans that correspond to the HSA/HDHP federal law.

My point here is in questioning whether, if this is true, these states are in violation of the federal law?

While states do have the authority to regulate insurance, the laws would be preempted if in violation of federal law, such as ERISA, for example.

Don Levit

[GBurns]

Don

Where did you see "that not all of the states have plans that correspond to the HSA/HDHP federal law."?

States do not have insurance plans, it is the insurance companies operating within a state who are the ones who do not have plans available for state approval, assuming that state approval is needed.

In any case the fact that Federal law allows something does not mean that it must be available. That an employee may pre-tax health insurance premium under a section 125 cafeteria plan, does not mean that the employee has to and it does not mean that the employer must put a section 125 cafeteria plan in place either. Mortgage interest is allowed to be deductible But you must get an eligible mortgage first and you must use the proper method for the deduction, if not although you may you might not or cannot.

As for your thought that violating a federal law causes pre-emption of state law... What can I say?

[Don Levit]

George:

On this message board, there have been several updates regarding HSAs and which states still do not have them.

The reason they are not available in these states, is because the accompanying HDHP does not meet the specifications of these states' insurance codes.

While I do believe that an insurer could still submit an amended policy, and possibly, get it approved as an experiemental, non conventional plan, apparently insurers have not done so.

In my experience, state approval is always needed before an insurer can offer a plan.

Are you familiar with the Supremacy Clause?

In effect, it states that if there is a conflict between state and federal law, that federal law must supersede state law.

This is why I asked the question if this federal law (which I consider to be insurance regulation, such as ERISA is) is a commandment or a suggestion to the states?

Don Levit

[GBurns]

The updates etc and in particular, the "Pinned Link" are in reference to those states that had not yet adopted the HSA. This is a tax issue and has nothing to do with insurance. This is similar to what happened with those states that did not adopt section 125 and I think there are probably still 1 or 2 states such as New Jersey, that still have not after over 20 years. That does not affect health insurance either.

The adoption of the HSA tax deduction has nothing to do with the availability of HDHP.

The qualifying HDHP has to meet the HSA requirement NOT that of the state insurance code. Most of those states already had HDHPs available and have had them since MSAs started years ago. There are NO state specifications that have to be met that pertain to HSA eligible HDHP, anyhow.

Many insurance policies especially in the small group market are out-of-state plans. The approval is from the state of domicile. The filing with each state is usually informational not for approval.

The Supremacy Clause is irrelevant in this issue. ERISA does not regulate insurance. ERISA preempts state law if the state law tries to regulate plans covered by ERISA. Insurance plans are not covered by ERISA so a conflict over insurance regulation does not occur. The conflict usually occurs when state law tries to regulate the employee benefit/welfare plan using insurance law. Health insurance is not an employee benefit plan or welfare plan.

And regardless of Supremacy or any other clause, violating a federal law still has nothing to do with the pre-emption issue. Raising the issue of the Supremacy Clause evades addressing the claim that you made.