Help Pass the HSA Improvement Act

United States Capitol Building

On March 1, Representatives Mike Kelly (R-PA) and Earl Blumenauer (D-OR) introduced H.R. 5138, the Bipartisan HSA Improvement Act. The legislation includes several provisions NAHU has advocated in recent years to address issues with HSAs and employer-sponsored coverage.

The legislation seeks to promote flexibility, encourage innovation and expand access to HSAs by aligning HSA regulations with the most effective cost-containment strategies that will help consumers save money and stay healthy.

Specifically, the legislation would:

  • allow HSA plans to offer pre-deductible coverage of health services at onsite employee clinics and retail health clinics.
  • allow HSA plans to offer pre-deductible coverage for services and medication that manage chronic conditions.
  • permit the use of HSA dollars toward wellness benefits, including exercise and other expenses associated with physical activity.
  • clarify that employers can offer “excepted benefits” like telehealth and second-opinion services to employees with a HSA plan.
  • correct the definition of “dependents,” streamline FSA conversion and fix the prohibition on a spouse using a HSA.

Contact your representative today! NAHU is calling on all members to send an Operation Shout asking your member of Congress to support H.R. 5138. You can also call your state representative.

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What’s Hot and What’s Not

self-fundingThe new year is a good time to look at the benefits larger companies are using to attract and retain good people. According to their 2017 Employee Benefits report, the Society for Human Resource Management tells us that HSAs, wholesale generic drug programs for injectable drugs, standing desks and genetic testing for chronic diseases are becoming popular. The report shows that 55% of businesses allow those with high deductible health plans to put part of their pay into an HSA tax free. This is up from 42% just a few years ago. 36% of employers now also contribute to workers’ HSAs. The percentage of employers covering genetic testing rose from 12% to 18% in just one year.

“Not so much” would describe dwindling interest in medical FSAs, long-term care insurance, mental health coverage and use of personal or life coaching. In other trends, daily casual dress has become the norm at 44% of surveyed companies and nearly 60% of companies now allow telecommuting.

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Rapid Growth for HSAs

HSAHealth savings accounts are hot, with nearly two-thirds of respondents to a Plan Sponsor Council of America survey saying they believe that even those without a high deductible health plan should qualify. A benefit often cited by employers and employees alike is that HSAs can be a valuable part of one’s retirement strategy, since healthcare expenses are viewed as one of the largest people face in retirement.

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Why employees should max out HSA contributions

The article below was published on September 13, 2017 by Employee Benefit News, written by Robert Lawton.

With healthcare open enrollment season quickly approaching, 401(k) plan sponsors may want to spend some time educating participants on the use of health savings accounts. If you offer a high-deductible health plan to your employees, they probably have the ability to contribute to HSAs. I believe that nearly everyone eligible to contribute to an HSA should max out their HSA contributions each year. Here’s why.

HSAs are triple tax-free
HSA payroll contributions are made pre-tax and when balances are used to pay qualified healthcare expenses, they come out of HSA accounts tax-free. Earnings on HSA balances also accumulate tax-free. There are no other employee benefits that work this way.

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HSA payroll contributions are truly tax-free

Unlike pre-tax 401(k) contributions, HSA contributions made from payroll deductions are truly pre-tax in that Medicare and Social Security taxes are not withheld. Both 401(k) pre-tax payroll contributions and HSA payroll contributions are made without deductions for state and federal taxes.

No use it or lose it
Employees may confuse HSAs with flexible spending accounts, where balances not used during a particular year may be forfeited. With HSAs, unused balances carry over to the next year. And so on, forever. Well at least until the employee passes away. HSA balances are never forfeited due to lack of use during a year.

Retiree healthcare expenses
Anyone fortunate enough to accumulate an HSA balance that is carried over into retirement may use it to pay for many routine and non-routine healthcare expenses. HSA balances can be used to pay for prescription drugs, medical premiums, COBRA premiums, dental expenses, Medicare premiums, long-term care insurance premiums and of course any co-pays, deductibles or co-insurance amounts. There are no age 70 1/2 minimum distribution requirements on HSA accounts like there are on 401(k) and IRA accounts. This makes HSA accounts a much more tax-efficient way of paying for healthcare expenses in retirement, especially if the alternative is taking a taxable 401(k) or IRA distribution. Continue reading

Millennials Drive HSA Growth

dgb-millennialsThe State of Benefits report from BenefitFocus shows that workers under the age of 26 are investing 20% more of their salary in HSAs than other generations. This is certainly due to the fact that nearly half have elected to enroll in high deductible health plans in 2017. While PPO plans remain very popular, especially among older adults, employee contributions to HSAs and FSAs are rising. A growing interest in savings among young people is another factor contributing to the increased popularity of HSAs.

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