As the U.S. faces an unprecedented healthcare crisis due to COVID, several temporary changes have been made to how health insurance plans function on behalf of the consumer. But with those changes coming to an end, what’s in store for the future of your health insurance?
The Coronavirus Aid, Relief and Economic Security Act and American Rescue Plan Act — trillion-dollar stimulus bills passed by President Trump and President Biden respectively — have allowed Americans far more flexibility in how much of their own money they can keep in their flexible spending accounts, health savings accounts and dependent care flexible spending accounts. But that flexibility came to an end on Dec. 31.
“Let’s just be honest: the virus isn’t slowing down,” says Jody Dietel, vice president of compliance and regulatory affairs at consumer benefits administrator, HealthEquity. “And while I don’t think Congress is in opposition to continuing these provisions, these issues haven’t bubbled up to the surface.”
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Initially, these provisions were intended to help consumers carry over and save money for healthcare and child care-related expenses as hospitals remained at capacity and schools shut down, explains Dietel. For example, the CARES Act allowed people to roll over an unlimited amount of their FSA dollars. This provision, otherwise known as part of the Consolidated Appropriations Act, meant account holders were no longer limited to the previous $550 rollover limit.
“Let’s say I’m waiting for a knee replacement, but due to the pandemic, that surgery has been canceled millions of times,” says Dietel. “The unlimited carry-over means people can seek the medical services they needed the next year — that was the logic behind the policy.”
Since that provision has expired, 2022 will be the last year people can bring their entire FSA with them into the new year. Unless anything changes, people will be able to carry no more than $570 with them into 2023, the amount reflecting an inflation adjustment from $550. This may prove troublesome if people continue to struggle with accessing medical services in 2022, and have an excess amount left in their FSA and nowhere to spend it — a scenario the omicron wave may hint at, as COVID hospitalization rates rise above last winter’s record.
The Safe Harbor provision is another expired piece in the CARES Act, which aimed to encourage telehealth by allowing high-deductible health plans to cover remote services at little to no cost, even before the plan user reached their deductible. Now, people will have to pay full price for virtual healthcare until their high deductible is met, which could very well be thousands of dollars.
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“There's been a lot of advocacy activity to try and keep that provision of the CARES Act, which is a very common-sense provision regardless of the pandemic since it saves tons of money and is a much more cost-effective use of care,” Dietel says. “Unfortunately, it’s not high on the list of priorities for Congress at this time.”
As for the American Rescue Plan Act, Dietel notes another limit change to FSAs — more specifically, dependent care reimbursement accounts, which are a type of FSA meant for costs related to children under 13 or tax dependents incapable of self-care. Since 1986, the contribution limit has been $5,000, but in 2021 Congress increased the amount to $10,500 under ARPA.
“The assumption is people needed more child care because they were working from home and the kids weren't in school,” Dietel says. “But it was just temporary.”
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Still, Representative Cynthia Axne and Senator Joni Ernst from Iowa introduced a state-wide bipartisan legislation called Improving Child Care for Working Families Act, which would keep the $10,500 contribution cap for dependent care FSAs. Dietel also points out that a number of associations and agencies, be it the U.S. Chamber of Commerce, the American Benefits Council, the Council for Affordable Healthcare and the Alliance for Healthcare are also trying to get Congress’ attention, as more Americans feel the loss of these expired provisions.
However, only time will tell how much money people will be able to save into 2023.
“We all believe that it will contribute and help consumers everywhere who have these plans,” says Dietel. “It just makes good policy sense — and with an increase in [COVID] cases, it’s kind of surprising that Congress has chosen not to act on the provisions we needed during the pandemic.”
