Congress is once again considering the possibility of expanding access to HSAs and how those funds can be used. As you may be aware, two bills addressing HSAs passed the U.S. House of Representatives in late July and are now sitting in the Senate.
As of this writing, the two pieces of legislation, H.R. 6199 and H.R. 6311, haven't been assigned to committee in the Senate. And with the midterm elections looming, both may fall victim to calendar deadlines. Although their future is uncertain at best, H.R. 6199 and H.R.6311 provide an insight into the future of HSAs.
So what does that future look like? Today we’ll break down the top eight ways H.R. 6199 would impact HSA owners, if enacted.
H.R. 6199 would
- add increased flexibility by allowing a High-Deductible Health Plan (HDHP) to provide families up to $500 in pre-deductible coverage for non-preventive care;
- add direct primary care arrangements to the types of coverage an individual can have;
- give employers the flexibility to offer various free or discounted medical services, either onsite or at a retail clinic, and HDHP-covered employees who receive those services would still be HSA-eligible;
- allow a person with HDHP coverage to contribute to an HSA, even if their spouse has an FSA, as long as the FSA doesn't reimburse any expenses for the HDHP-covered spouse;
- allow employees to transfer their HRA and/or FSA balances to an HSA, if the employee enrolls in an HDHP and establishes an HSA;
- allow HSA funds to be used to buy over-the-counter medications without a prescription;
- allow HSA funds to be used to purchase menstrual care supplies;
- allow families to use up to $1,000 per year in HSA funds to pay for gym memberships, as well as safety equipment and participation/instruction fees for "qualified physical activities."
While it’s unlikely the Senate will move on either piece of legislation this year, HSAs continue to skyrocket in popularity as health insurance premium increases have become the new normal in this uncertain market.
HSAs also remain popular because consumers are looking for more choices and more ways to save. For example, HSAs offer triple tax savings. This means any HSA contributions can be made either pre-tax or are tax deductible at year-end. Any interest income or earnings on investments tied to an HSA remains tax free. Lastly, as long as the HSA funds are used to pay for qualified health care expenses then no taxes will be charged on distributions.
Moving forward, we’ll continue to track both pieces of legislation and provide updates as necessary. In the meantime, please check out this article about H.R. 6311 if you’re interested in learning more about the bill we were unable to cover in today’s post.