HSAs Coming to FEHB

The Office of Personnel Management has authorized creation of health savings accounts in the Federal Employees Health Benefits program as of the 2005 plan year. HSAs, authorized by last year’s Medicare reform bill, are tax-advantaged savings accounts available to those who are not eligible for Medicare (generally meaning those under age 65) and who are in a high-deductible health plan. Such plans are defined as those with annual deductible of at least $1,000 and annual out-of-pocket expenses of up to $5,000 for single coverage, and double those amounts for family coverage. HSAs allow enrollees to put in pre-tax amounts of up to $2,600 for individuals and up to $5,150 for families for medical expenses, with additional catch-up contributions allowed for those 55 and older. HSA plans can be available to both active employees and retirees in such plans who are not eligible for Medicare. OPM said that HSAs will offer greater flexibility for FEHB enrollees to make decisions on how to spend money on health care. However, it’s unclear how many carriers will accept OPM’s invitation to create such options.