BANKS AND BANKING;

INSURANCE - HEALTH; BANKS;

Federal laws/regulations; Connecticut laws/regulations;

You asked how does federal and state health insurance continuation requirements apply to medical savings accounts (MSAs) and whether MSAs provide coverage for an employee’s or self-employed worker’s spouse and dependents.

The federal health insurance continuation requirement (known as COBRA) applies to group health plans for employers with 20 or more employees (P. L. 99-272). Connecticut’s continuation requirement, which is nearly identical to federal COBRA, applies to health insurance policies delivered, issued for delivery, or renewed in the state, regardless of the number of insureds. Connecticut’s continuation law provides coverage for certain events not covered by federal COBRA (CGS §§ 38a-538, 546 and 554).

MSAs are a form of health insurance coverage that combines high deductible catastrophic or major medical expense insurance with a personal tax-deferred savings account. The account is used to pay for qualified medical expenses.

Federal tax-qualified MSAs are only available to:

1. the self-employed;

2. employers with 50 or fewer employees; and

3. the uninsured.

Federal COBRA applies to “group plans” for employers with 20 or more employees. MSAs consist of savings account and insurance components, but it is nevertheless a group health plan, subject to COBRA, and one of several health coverage options large employers offer their employees.

Under Connecticut’s continuation law, employers with fewer than 20 employees who buy a group high deductible catastrophic or major medical expense policy in the state to complement the tax-deferred MSA will have continuation requirements included in the policy (CGS § 38a-546).

MSAs cover individuals and families. The maximum deductible for family coverage under a catastrophic or major medical insurance policy is from $ 3,300 to $ 4,950 annually. The deductible covers all family members combined. The maximum annual out-of-pocket expense, including premiums, copays, and coinsurance for family coverage is $ 5,850. The minimum annual contribution to the savings account for family coverage is $ 2,400 and the maximum $ 4,387.

JH: ts