Sibylla Bostoniensis

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Hey Americans (and other people stuck in the American healthcare system)! Shopping for a health plan on your state marketplace? Boy, do I have some information for you that you should have and probably don't. There's been an important legal change affecting your choices that has gotten almost no press.

Effective with plan year 2026 all bronze level and catastrophic plans are statutorily now HDHPs and thus HSA compatible. You may get and self-fund an HSA if you have any bronze or catastrophic plan, as well as any plan of any level designated a HDHP.

2025 Dec 9: IRS.gov: "Treasury, IRS provide guidance on new tax benefits for health savings account participants under the One, Big, Beautiful Bill"

Bronze and Catastrophic Plans Treated as HDHPs: As of Jan. 1, 2026, bronze and catastrophic plans available through an Exchange are considered HSA-compatible, regardless of whether the plans satisfy the general definition of an HDHP. This expands the ability of people enrolled in these plans to contribute to HSAs, which they generally have not been able to do in the past. Notice 2026-05 clarifies that bronze and catastrophic plans do not have to be purchased through an Exchange to qualify for the new relief.

If you are shopping plans right now (or thought you were done), you should probably be aware of this. Especially if you are planning on getting a bronze plan, a catastrophic plan, or any plan with the acronym "HSA" in the name or otherwise designated "HSA compatible".

The Trump administration doing this is tacit admission that all bronze plans have become such bad deals that they're the economic equivalent of what used to be considered a HDHP back when that concept was invented, and so should come with legal permission to protect yourself from them with an HSA.

Effective immediately, you should consider a bronze plan half an insurance plan.

It's not that they've changed anything about how bronze plans work. They're just admitting something that's been true for a while: the deductibles on marketplace bronze health plans have gotten so absurdly high, they should legally be considered HDHPs. So now they are.

But the whole HDHP concept is that it's half a health plan. The idea is that a HDHP is a plan that's super cheap because you're only getting half of it, because you're going to self-insure the other half.

There's been a horrendous problem for years with buyers on the state ACA marketplaces (including the federal healthcare.gov) having no idea that buying a health plan with "HSA" in the name means you're not getting a whole plan. These plans are overwhelmingly the cheapest option – again, because you're buying only half a plan – so people pick them to be economical without any idea what they've gotten themselves into.

The fact that bronze plans now suck so hard they are actually worse than the original HDHP standard when it was created has in no way actually been fixed by this change, but at least it's now legal for you to self-insure against what your bronze (or catastrophic) plan doesn't cover even if the insurance company hasn't sought the official HDHP designation for the plan.

Health insurance shoppers! The federal government just admitted by implication that bronze plans aren't really adequate whole health coverage.

Look, I had been all set last month to write a big thing about how you should never buy a plan with "HSA" in the name unless you were prepared to go buy yourself an HSA to go with it, because otherwise, your ass would be hanging out in the wind, insurance-coverage-wise. Pragmatically, what that means is when pricing out plans, making sure when you were looking at a plan with "HSA" in the name you didn't take the premium at face value, because an HSA-compatible HDHP – which is what that is – is meant to be used with an HSA you get and fund for yourself, so the price is really the premium plus whatever for the HSA.

Now, the Trump administration has up and implicitly admitted that ALL the bronze (and catastrophic) plans expose members to as much financial risk as the heretofore officially designated HDHPs – the plans for which the real cost for adequately-comprehensive health care coverage is the premium plus the cost of a separate HSA.

Some of you reading this are, I know, lost about what I am talking about. This is all Sanskrit to you. Stick with me and I'll explain it. It is, unfortunately, a bit complicated.

Some of you reading this followed all that, and are horrified and somewhat frightened, because you bought a bronze plan because it was the cheapest option available to you, and most definitely don't have extra money to be sinking into an HSA to protect you from your awful deductible. I'm sorry. There isn't anything for you to do here, except maybe change to a better metal level of plan if you can afford it. Please note that due to unintended consequences from GOP shenanigans back in 2017, in some states gold plans can be cheaper than silver, and some states even have have $0 premium gold plans, so you might want to look into whether your state is one of them.

Some of you reading this followed all that, and are pissed off at the idea that you might need to come up with more money to patch your garbage insurance's holes. Not an unreasonable impression, but presumably you knew your bronze plan was shit on a shingle: it's a bronze plan. (If the fact that your bronze plan had a huge deductible is news to you, well, now you know. Sorry to be the bearer of bad tidings.) Nothing about the terms of the plan have changed. You're not any more screwed that you were when you signed up for it. It's just that now, having it legally qualifies you to do the thing that might make it better. Yes, doing that takes money, but previously money would not fix it: it was just as broken as it is now, but your hands were tied. So I invite you to look at this as an opportunity.

Some of you reading this signed up for Silver or better plans and are now going, "WAIT! If I changed to a bronze plan, I could get an HSA?!?!" Yeah. Go knock yourself out.

The irony here is that HSAs can, in fact, be awesome, even if you do have to self-fund one. HSAs are, to their many fans, a feature, not a bug. That's why they were something of a privilege the law didn't let just anybody go out and get, you had to have a special kind of health plan to be allowed to do that.

Now, they're throwing that privilege out to the masses with abandon like tossing life-preservers to shipwreck victims bobbing among the icebergs.

Below is an explanation of what HDHPs and HSAs are, and why you might want in on this. Below that is a discussion of some of the disturbing politics of this.





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The acronym "HDHP" stands for "high-deductible health plan" – but be careful: it's an improper noun. A "high-deductible health plan" is not any health plan with a high deductible. It's a health plan which got a special designation as an HDHP. (All other high-deductible health plans were just sparkling mangaged care.)

It is a designation that is bestowed by the IRS. The IRS? Yes. The IRS, because this has tax consequences. The reason the HDHP designation was important is that by law, only people enrolled in a plan designated an HDHP were allowed to do this thing with HSAs, which has to do with taxes. (More about HSAs in a moment.)

Back when this whole HDHP thing was invented, in 2003, the notion of what constituted a "high" deductible was something which would be considered laughably low today. For instance, the present IRS rules for qualifying for the designation "high-deductible health plan" currently require an individual plan to have a deductible of at least (Mr-Evil-Voice/) seventeen hundred dollars. Yeah. No, not $17,000; $1,700. No, not back then. Today. In today dollars. Yeah.

So it makes sense that now all bronze plans are just officially HDHPs, without needing to get the designation. (Now even the sparkling managed care is legally a HDHP.)

Heretofore, only a small number of marketplace plans were HDHPs. But buried in the OBBB was the provision that starting 2026 all bronze plans and catastrophic plans are henceforth designated HDHPs, even though they may violate other stipulations for qualifying for the HDHP designation, and that's why I'm here explaining this to you.

The acronym "HSA" stands for "health savings account" which is not only an improper noun, it's a misnomer. HSAs could be savings accounts, technically, but generally aren't, and it would be tragic if it were.

An HSA is two unlikely things fused together:

1) A way to self-insure your health care and
2) A tax-advantaged retirement investment vehicle.

Looked at one way, an HSA is a retirement investment account the government allows you to withdraw from without penalty to pay for medical expenses not otherwise covered by your health insurance; looked at another way, an HSA is a self-insurance investment vehicle that lets you keep any money you don't spend on health care growing in some investment(s) until you reach retirement age and then you can have it all back with whatever compound interest you've managed to accrue.

Thus an HDHP + an HSA is the answer to the perennial question, "Damn health insurance is expensive. Is there some way to not give all this money to the insurance company? Couldn't I just... not? Like pay to have a plan for truly ruinous health catastrophes, but otherwise not have coverage, and I'd put the money aside I'd otherwise pay for insurance and use that to pay doctors myself? And then if I don't get sick, I get to keep the money?" Yes: that's what an HDHP with an HSA is supposed to be.

The idea is that an HDHP is supposed to be a bare-bones, catastrophic plan – low premiums, high deductible – that you pair with an HSA into which you put money to cover what the HDHP doesn't. You technically still own the money you put in your HSA, but you can't touch it for any purpose other than health care expenses, and putting into the HSA's optional investments. What investments those are depends on what is offered by the HSA vendor you go with.

Or rather, you can't touch it until you retire. Once you reach retirement age, you can withdraw from it freely; there's no restriction that it be used for medical care. It's just yours.

The thing is, HSAs are, famously, "triple tax advantaged". For people who are looking to save for retirement and minimize taxes, they can be quite popular. The money you put in it is before-tax dollars, the money it earns in the investment is not taxed while it's there, and any money you withdraw to spend on health care is not taxed.

In fact, HSAs are so popular as investment accounts because of their tax advantages, there's boffins out there gaming them by maxing out their allowed contribution each year, and then not using them for medical expenses, and instead eating the cost of uncovered medical care out of pocket to protect their investment. A nice trick if you have the funds to pull it off.

So this whole HSA thing is actually a potentially nice thing to do, if you understand it and are up to a little administrative hassle. If nothing else, running your money through an HSA before using it to pay for what your health insurance won't – deductible, copays, co-insurance, what have you – amounts to an approximately 25% discount off your out-of-pocket health expenses for most people. Because money put in an HSA is not subject to income taxes if used for medical care, and most people's income taxes are about a 25 cent bite out of every dollar. Though you have to do your taxes right to get that benefit.

Importantly, you have the option put the money in only when you realize you need to spend it. If you're shopping your own insurance and have to get your own HSA (not have one given to you by an employer) deposits are at your discretion, at any time. There's an annual upper limit to how much you can put in. But you are free to wait and see what you need to spend on health care and then put in only the amount you need pay your medical bills. You literally can wait until after you get a bill to contribute the money to pay it to your HSA, and then pay it from the HSA. And then come tax time, that money gets declared exempt from taxation (if you fill out the right form) and you get the balance as a reduction of your taxes owed or an increase to your refund.

(If you're self-employed, it's even better because you can skip the whole "give it to the government and get it back" steps.)

Note that the company you get an HSA from may have fees to administer it for you, and it may be cheaper or free to have more money in it; also, you get no investment returns on money that spends no time invested. But, still, ~25% off out of pocket medical expenses.

And one of the crucial things to know is that you can have an HSA at any time. Once you put the money in, you get to continue to own it and the HSA until, well, you spend it, i.e. theoretically forever. Let's say you get an HDHP this year but then don't in 2027. If you still have money in your HSA, you can still spend it on health care in 2027 and beyond.

What you can't do unless you are enrolled in a HDHP is put money in. That's the thing the special permission is about. That's what you need to be enrolled in the HDHP to be legally allowed to do. You have to be enrolled in an HSA-compatible health plan – which now includes all bronze and catastrophic plans, as well as other metal level of plans which have the HDHP designation – to be allowed to contribute money to an HSA. Or have someone else contribute to it on your behalf.

So if you think having a magic income-tax-exempt account to run your money through before using it to pay for your out-of-pocket medical expenses would be nice, or having a sexy triple-tax-advantaged retirement investment account might be rad, or you want to be able to get a reasonable interest rate on the money you are going to be stuck paying for your care before you hit your too-high deductible – and you have a HDHP – you might want to go find yourself an HSA.




2.

The fact that now everybody who gets a bronze or catastrophic plan is now eligible to contribute to an HSA is a good thing for those who can do it. I mean, it would be even better if anybody told/warned the people buying bronze plans that this is both an option and a very good idea. And it's not as good an idea as restoring the subsidies and/or otherwise fixing our out of control premiums and/or actually replacing the whole system with something less awful. But it's definitely a good thing for the individual.

It's not a good thing for society.

Remember, back when, I wrote about how the advent of 401(k)s made all Americans with one a little bit capitalist? How it gives people skin in the game of the stock market, such that the closer they get to retirement and the more money they have in their retirement account, the more their financial interests align with business owners rather than workers? And that might have something to do with how people vote?

For instance, consider how up to the 1980s, it was common for American businesses to offer long-term employees a pension. This was often one of the terms negotiated by unions. But in 1978, the 401k was invented as a legal alternative. The 401k was a retirement investment vehicle, where the employer contributed money designated for retirement to the employees 401k, which was invested, most typically, in the stock market. Employees are allowed to manage their own 401k investments. By the 1990s the 401k had become the predominant form of retirement bene, completely supplanting the pension in American life.

Consequently, huge swaths of American society became owners of the means of production — part-time. This ownership came with almost no authority over the means of production, but it did mean that they received financial compensation derived from owning the means of production. This did nothing to change their status as employees. They still earned their living not from owning the means of production but by operating them. But now their retirement would be funded by ownership of the means of production.

Thus, much of the American society was made proletariat in the present and bourgeoisie in the future, with the financial interests of both employees and employers. [...] The actual financial reality of any employed person with a sufficient 401k contribution starting early enough in their career, is that they are both an exploited proletariat and, well, not a temporarily embarrassed millionaire, but a millionaire with an acute several-decade-long liquidity problem.

There are a lot of reasons that union membership collapsed in the United States in the 1990s. One that I have not seen previously discussed is that with the rise of the 401k, the fundamental interest class identity (per Marx) of American workers changed. It was adulterated, if you will, and was no longer purely proletariat.

To the extent the American public became aware that their economic fate in retirement was a product of how well their ownership stakes (stock) in companies other than the ones they were employed by did, their financial interests inclined them to be in favor of the rights of the employee (for instance, to unionize) at their own workplace — you know, for themselves — but the rights of the employer (for instance, to union bust) everywhere else.

In possession of a 401k, a worker who hears about workers in another industry striking for higher wages might find themselves concerned that higher wages for those other workers will come out of the dividends and stock appreciation of a company that worker is invested in through their 401k. They might well find themselves thinking, "Hey, wait a minute. I don't want those other workers to be paid more. That will come right out of the ultimate profits of the company, and drive down its stock price – which will be reflected in my retirement!"

In this way, the 401k as the predominant form of retirement fund was likely an engine for workers becoming hostile to other workers and their interests. Or so analysis based on the Marxist paradigm of class predicts. And that certainly seemed to be what happened in American society.

This is the same game, only in the health insurance space. Instead of having pensions, workers' retirement funds are 401ks that invest their money in the stock market; instead of having adequate affordable insurance, workers self-insure (partially) with an HSA, that invests their money in the stock market.

If this catches on, an increasingly sizable chunk of the working-age population aren't only itsy-bitsy little capitalists because of their retirement funds, they're also itsy-bitsy little capitalists because of their health care funds.

So this is a good thing for the individual, in so far as it allows the individual to provide for their retirement and mitigate the risk of their exposure to health care expense. But it's not a great thing for society as a whole if, as I theorize, it contributes to American culture's hostility towards workers and utter lack of solidarity.

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