House Passes Two Bills to Expand HSA Coverage

United States Capitol Building

Yesterday, the House passed two bills that would expand HSA coverage:

The Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018 (HR 6199)

This Act would:

  • Allow plans flexibility in providing first dollar coverage up to $250 for a single and $500 for a family for additional services, such as those related to treatment of chronic conditions and telehealth services.
  • It would also make certain OTC drugs a qualified medical expense.
  • Allow HSA funds to pay for direct primary care up to $150 per month for an individual and $300 per month for a family.
  • Expand HSAs to allow physical activity, fitness and exercise related services (i.e., gym memberships, sports equipment) to be qualified medical expenses (up to $500 for an individual and $1,000 for a family).
  • It would also loosen some of the contribution restrictions on spouses who have a flexible spending account (FSA) at their employer.
  • Allow employees, at the employer’s discretion, to convert their FSA and HRA balances into an HSA contribution upon enrolling in a high deductible health plan with an HSA. The conversion amount is capped at $2,650 for an individual and $5,300 for family coverage.

Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018 (HR 6311)

This Act would:

  • Increase the maximum contribution to health savings accounts (HSAs) to $6,650 for an individual and $13,300 for a family.
  • Allow both spouses to make catch-up contributions to the same health savings account. Under current law, if both spouses are HSA-eligible and age 55 or older, they must open separate HSA accounts for their respective “catch-up” contributions.  This provision would allow both spouses to deposit their catch-up contributions into one account.
  • Allow working seniors enrolled in Medicare Part A to contribute to an HSA.
  • Allow individuals in a bronze or catastrophic health plan to contribute to an HSA.
  • Allow balances on flexible savings accounts to be carried over.
  • Allow HSAs opened within 60 days after gaining coverage under a HDHP as having been opened on the same day as the HDHP. This would give a grace period between the time coverage begins through an HDHP and the establishment of an HSA.  Currently, HSA funds can only be used for qualified expenses after the HSA has been established.
  • It would also delay the Affordable Care Act’s health insurance tax for another two years to 2021.

There are a handful of other healthcare related bills yet to be taken up by the House. It is unclear if they will act prior to the August break (beginning July 30th). Both of the above Acts will most likely be taken up by the Senate after the break.

Diversified Group will be following the progress of these bills closely and will provide updates as they are received.

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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