HSA, HRA, FSA Expansion Moves Forward in the House, Faces Challenges

The House adopted two bills earlier this week on July 25 in an effort to lower health care premiums and expand health savings account (HSA) flexibility.

The bills—H.R. 6199, the Restoring Access to Medication and Modernizing Health Savings Accounts Act, and H.R. 6311, the Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act—aim to expand and increase the favorable tax status of certain health care accounts.

HSAs, health reimbursement accounts (HRAs) and flexible spending accounts (FSAs) are deemed tax-advantage health care accounts. All three accounts allow for pre-tax contributions to purchase eligible medical expenses listed in IRS Code Section 213(d). A few notable examples of proposed changes include:

  • Individuals would now be able to purchase over-the-counter (OTC) medications with an HSA, FSA, or HRA without being required to obtain a prescription for eligibility purposes
  • Menstrual care products would become qualified medical expenses that could be purchased with all tax-advantaged health care accounts
  • Certain sports and fitness expenses—including gym memberships and the cost to participate in certain physical exercise programs—would be treated as qualified medical expenses up to a limit of $500 a year for an individual and $1,000 a year for a joint return

H.R. 6311 proposes to increase HSA contributions to $6,650 for individuals and $13,300 for families which mirrors the annual out-of-pocket and deductible expenses on HSA-qualified insurance plans. This represents an almost 200 percent increase to the current HSA contribution limits. A few other changes include:

  • Individuals would no longer be barred from contributing to an HSA if his/her spouse is enrolled in a medical FSA
  • Working seniors in Medicare Part A and covered by a qualifying high deductible health plan would now be able to contribute to an HSA
  • Balances on FSAs could be carried over with certain restrictions

Next Steps

Each bill must pass the Senate in identical form. Skopos Labs, a technology company that uses A.I. powered research to make predictions, gives these bills a 30 percent or less chance of passing in the Senate. The biggest factor for its projected failure is the text of the overall bill.

Challenges

Those opposed to their passing cite two major reasons: 1) both bills would add to the national debt, and 2) HSAs don’t adequately serve the working class.

It’s unlikely either bill will pass, but it won’t be the least we hear on this subject as the Trump Administration is likely to pursue similar bills in the future.

If you have any questions pertaining to this update, please don’t hesitate to reach out and contact me.

 

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Michelle Cammayo

About Michelle Cammayo

Michelle Cammayo has more than 13 years of Employee Benefits experience specializing in all lines of health and welfare benefits. Today, Michelle works closely with clients and partners to provide guidance in areas of the law including ERISA, HIPAA, COBRA, FMLA and PPACA. She also oversees the Compliance Department at Bolton & Company to ensure we are helping our clients manage and eliminate risk with regards to employee benefit compliance.

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