House of Representative Committees Propose Significant Changes Impacting HSAs
November 25, 2019
On October 23, the House Ways and Means Committee passed three bipartisan healthcare bills that expand and improve the usage of health savings accounts (HSA), flexible spending accounts (FSA), and health reimbursement arrangements (HRA). The bills, which reflect employer recommendations for modernizing and enhancing rules, would make several updates to current law. Here’s how they could impact healthcare consumers:
- The Restoring Access to Medication Act (HR 1922) would repeal the Affordable Care Act’s ban on using HSA funds to pay for or reimburse over-the-counter drugs (unless prescribed). In addition, the bill would allow HSA funds to pay for or reimburse expenses for menstrual care products. These changes would also apply to reimbursements from health FSAs and HRAs.
- The Primary Care Enhancement Act (HR 3708) would allow otherwise HSA-eligible individuals who have a direct primary care service arrangement (DPCSA) to make or receive contributions to an HSA. Direct primary care could be treated as a qualified medical expense and individuals could use their HSA to pay for or reimburse DPCSA fees. (For this purpose, a DPCSA is an arrangement under which individuals receive only primary care services from primary care practitioners, whose sole compensation for those services is a fixed periodic fee.)
- The Inhaler Coverage and Access Now Act (HR 4716) would allow HSA-qualifying high-deductible health plans (HDHPs) to cover on a pre-deductible basis any medicine or drug delivered through inhalers to treat any chronic lung disease. (IRS Notice 2019-45 recently expanded the list of preventive care benefits that HSA-qualifying HDHPs can—but are not required to—cover before enrollees have met the deductible. However, that list includes only inhaled corticosteroids for asthma, while this bill goes further.)
The next step is for the House of Representatives to vote on these bills.
Earlier this month, the U.S. House of Representatives Republican Study Committee (RSC) released a comprehensive proposal to address perceived weaknesses in Americans’ access to quality, affordable healthcare. The proposal includes changes intended to significantly expand the use of health savings accounts (HSAs). The RSC’s proposed changes include:
- Permitting HSAs for payment of health insurance premiums
- Permitting HSAs for payment of participation in health sharing ministries, direct primary care (“concierge”) arrangements, and other non-traditional health-insuring arrangements
- Allowing persons whose health insurance is not a high-deductible health plan (HDHP) to make HSA contributions
- Allowing persons with no health insurance to make HSA contributions
- Increasing the annual individual HSA contribution limit to $9,000 (currently $3,550 for 2020)
- Increasing the annual family HSA contribution limit to $18,000 (currently $7,100 for 2020)
- Allowing annual catch-up contributions ($1,000 for those age 55 or older) to be made to a non-catch-up-eligible spouse’s HSA
- Permitting persons receiving currently disqualifying Medicare benefits to make HSA contributions
- Expanding HSA-eligible health services and products beyond those currently allowed to include all FDA-approved over-the-counter/non-prescription medicines (not to include homeopathic or dietary products, or fitness equipment)
- Allowing military Tricare, Indian Health Service, or other veterans’ benefits recipients to contribute to an HSA
- Permitting those with health flexible spending arrangements (FSAs) to make HSA contributions
- Allowing FSA or health reimbursement arrangement (HRA) balances to be converted to HSA assets
- Allowing annual rollover of unused FSA balances to an HSA, at an employer’s discretion
- Protecting HSA accounts in bankruptcy proceedings
- Prohibiting HSAs from being linked to insurance coverage that provides abortion services, and treating abortion services as non-eligible expenses for HSA purposes
The RSC’s proposal is presented as an alternative to a “Medicare-for-all” type program, in which the federal government would play a central role in the delivery of health care benefits.
Chard Snyder will keep you informed as these proposed legislative changes develop.
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