Weekly Column of U.S. Senator Lamar Alexander - “Health Care Choices for Seniors”

Posted on April 7, 2006

Last Friday, April 7, I introduced the Health Care Choices for Seniors Act in the United States Senate. I’m proud to be partnering in this effort with my colleague, Representative Marsha Blackburn (R-TN), who introduced the bill in the House. With Americans living and working longer than ever before, age 65 is not as old as it used to be. Many members of the Baby Boom generation are not planning to retire at age 65 and want more health insurance options. Our bill is about giving Medicare-eligible seniors more choices to manage their health care, including the option of longer use of a health savings account (HSA). Under current law, when seniors turn 65, they are required to join Medicare Part A. If individuals choose to waive Medicare Part A for any reason, including their desire to maintain private healthcare coverage such as an HSA, they lose their Social Security benefits. If an individual joins Medicare, he or she loses the ability to make further tax-free contributions to their HSA. In addition, the current Medicare enrollment penalty system requires individuals to join Medicare immediately when turning 65, or face the penalty of a higher cost if they join at a later age. For these reasons, many seniors feel forced into Medicare before they are ready. The Health Care Choices for Seniors Act would alleviate some of the disincentives against using HSAs. Through this legislation, instead of automatic enrollment in the Medicare program at age 65, individuals would have the option of using an HSA and high deductible health plan (HDHP) for a few more years without penalty. Our bill would alleviate the Social Security benefits penalty, and allow individuals to continue tax-free contributions to their HSA. Therefore, individuals could opt out of Medicare, keep their HSAs, and still receive Social Security benefits. The bill would also provide a voucher for those that choose to opt out of Medicare in return for their years of paying Medicare payroll taxes. Use of the voucher would be limited to funding an HSA or paying the premiums of an HDHP. In addition, this legislation would delay Medicare enrollment penalties to age seventy for those seniors who can show that they used an HSA and HDHP in lieu of Medicare. I am a strong supporter of HSAs and other market-based approaches to health coverage which may help combat sharply rising health care costs. HSAs only became available in January 2004, but they have seen significant growth in both individual and employer markets. A recent census by America’s Health Insurance Plans showed that HDHPs offered in conjunction with HSAs covered 3.17 million people in January 2006, up from 1.03 million in March 2005. This bill is an important step toward giving seniors in Tennessee and across the country more options to manage their health care and greater use of health savings accounts. I look forward to working with Representative Blackburn to build support for our legislation in both chambers of Congress.