PROVIDENCE – The state Senate has approved a bill exempting high-deductible health plans that are eligible for health savings accounts, removing a hurdle that had kept HSAs out of the reach of most Rhode Islanders. The House passed an identical bill on April 28, making it likely that Governor Donald L. Carcieri will soon be able to sign the measures into law.
HSAs are tax-free accounts used in conjunction with high-deductible health plans. U.S. Treasury rules bar such plans from providing deductible-free coverage for anything but a narrowly defined set of preventive services, but a Rhode Island law that went into effect Jan. 1 required first-dollar coverage for early intervention services for special-needs children.
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None of Rhode Island’s dozens of other coverage mandates conflict with the HSA rules, state officials have said. But until the early-childhood mandate is eliminated, HSA-eligible health plans are illegal for anyone except self-insured employers, who are exempt from mandates.
HSA supporters, including Carcieri and UnitedHealthcare of New England, had hoped to “fast-track” bills correcting the problem, but the measures were delayed after legislators raised concerns about the impact of high-deductible plans on health care in the state.
The bills, as passed by the House and Senate, provided, exempt HSA-eligible plans from the early-childhood mandate only until July 1, 2010, and require the health insurance commissioner to submit a comprehensive report on HSAs’ impact by April 2008.
Nationwide, more than 1 million HSA-eligible plans were in place as of last March, according to a report by America’s Health Insurance Plans, but the number of actual HSAs is still much smaller. AISHealth.com, a health care business information provider, reported recently that over 425,000 HSAs have been opened since Jan. 1, 2004.
HSAs are growing fast, however, amassing about $460 million in deposits so far, AISHealth’s Inside Consumer-Directed Care reported. Based on interviews with 21 HSA administrators, ICDC estimated that over 50,000 new HSAs are opened each month.
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