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The Business Council Supports A.4640 (Barclay), allowing Freedom Health Plans. The Medicare Modernization Act of 2003 included a provision to allow individuals to create a new tax-favored account, commonly referred to as a Health Savings Account (HSA) or Freedom Health Plans, to pay for medical expenses. The account can only be created when the individual or the individual's employer purchases a health plan with a higher deductible, a minimum $1,000 for individuals and $2,000 for family coverage.
Traditional managed care companies are restricted from selling these higher deductible policies and therefore thousands of New Yorkers cannot start an HSA.
Some employees have access to high deductible health insurance plans. Large employers who are subject to ERISA and not New York State Insurance Law, can purchase them. Employers who purchase indemnity coverage or preferred provider organization coverage can buy them. But the vast majority of employers who purchase traditional managed care coverage are restricted from purchasing them because Insurance Law considers the deductible to be too high.
The ability of individuals to create their own health savings accounts can quietly transform the health care system. When employees are spending their own funds, there will be a greater incentive to use services more prudently. HSAs also allow the employee to carry-over their accounts from year to year, thus building up more substantial funds to use at a time when they are more likely to need more services. The HSA is also portable for the employee, allowing them to take the money with them if they change employment. Additionally, employers are also authorized to put money into an employee’s HSA.
As health care costs are continuing to rise by multiples of the inflation rate, the savings realized by New Yorkers using Freedom Health Plans would be quite significant and would be welcome relief for small businesses throughout the state.
For these reasons, The Business Council supports A.4640.