The House of Representatives (“House”) recently passed two bills aimed at reforming several features of Health Savings Accounts (“HSAs”). Each bill would make significant changes to HSAs, which may allow people to save more for qualified medical expenses and in turn, may help future retirees build their nest egg more quickly. Each bill moves on to the Senate for a vote sometime later this year.
Highlights of the Changes
The first bill, Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018 (H.R. 6199) would:
- Provide that Direct Primary Care Service Arrangements are not considered a health plan that would disqualify an individual from contributing to an HSA and allow HSA funds to be used tax-free to pay for fees associated with primary care arrangements.
- Allow flexible spending accounts and health reimbursement accounts to be terminated and funds converted to an HSA.
- Allow employers to offer free or discounted services at on-site or retail medical clinics without disqualifying an HDHP enrollee from contributing to an HSA so long as significant medical care benefits are not provided.
- Individuals would no longer be barred from contributing to an HSA if his/her spouse is enrolled in a medical FSA.
- Individuals would be able to purchase over-the-counter (OTC) medications with an HSA, FSA, or HRA without being required to obtain a prescription.
- Allow certain sports and fitness expenses to be treated as qualified medical expenses.
- Expand flexibility of “first-dollar coverage”, allowing employers to expand services that would be covered in full under the health plan such as primary care visits and telehealth services.
The second bill, Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018 (H.R. 6311) would:
- Increase the amount in a health flexible spending account that can be carried forward to the following plan year.
- Allow HSA-eligible working seniors enrolled in Medicare Part-A to contribute to their HSA.
- Increase contribution limits for individual and family plans to the statutory limits for out-of-pockets expenses.
- Allow eligible employees with an FSA or HRA who enroll in a qualified high-deductible plan with an HSA to transfer balances from their FSA or HRA. Transfers would be capped at $2,650 for individuals and $5,300 for families.
- Allow submission of eligible expenses incurred before establishment of HSA.
- Permit both spouses to make annual catch-up contributions to the same HSA.
- Give the ability for all Americans to purchase catastrophic healthcare plans.
- Delay the Obamacare health insurance tax by an additional two years.
Nyhart will continue to monitor the progress of each as bill and release updates accordingly. Please contact your account representative at Nyhart for more information or if you have any questions.