Earlier this month, U.S. Representative Mike Kelly (R-PA) – a member of the House Ways and Means Committee and Rep. Earl Blumenauer (D-OR) co-authored H.R. 5138, the Bipartisan HSA Improvement Act. The proposed legislation would improve Health Savings Accounts (HSAs) for millions of Americans. The legislation is co-sponsored by Erik Paulsen (R-MN), Ron Kind (D-WI), Terri Sewell (D-AL), and Brain Fitzpatrick (R-PA).
In summary, the Bipartisan HSA Improvement Act would simplify and enhance health savings account (HSA) participation as follows:
- Treat chronic care medicines and services as preventive care.
- Allow onsite/nearsite clinic treatment of primary care, chronic care and preventive care.
- Fixes/coordinates Section 213/223 age 26 issue for HSA distributions. This would allow a parent to use their HSA dollars for their adult child up to the age of 26.
- Allows HSA eligibility even if spouse has a health flexible spending account (FSA).
- Allows for limited FSA/HRA rollovers into HSAs.
- Allows for certain exercise and gym expenses be tax free.
What this new proposed legislation does not include is some of the other fixes that had been proposed last year in Senator Hatch S.403 (R-UT)/Rep. Erik Paulsen (R-MN) Health Savings Act of 2017 as follows:
- Renames HDHP to HSA qualified Health Plan
- Both spouses can make catch up contribution to one account
- Additional individuals would be eligible for HSA even if enrolled in Medicare Part A, Indian health Services Plan, Health Care Sharing Ministries, Direct Primary Care Arrangements, Onsite Medical Treatment, Embedded Deductibles
- Reverse the Affordable Care Act over the counter limitations for HSAs, FSAs and HRAs
- Allow high deductible health plan (HDHP) premiums to be an eligible expense
- Fixes establishment date where expenses would be eligible for HSA distribution as long as the HSA is established within 60 days of enrollment in HDHP
- Clarifies Preventive Care
- Elevates HSA status for bankruptcy
- Corrections for erroneous distributions
- Reauthorizes Medicaid Health Opportunity Accounts
- Increases maximum HSA contribution limits to the qualified HDHP deductible and out of pocket limits.
- Amends IRS Code § 213 to permit: $1,000 tax deduction for exercise equipment and fitness program fees; $1,000 tax deduction for certain nutritional and dietary supplements; Permit periodic provider fees for certain concierge medical plans
Any of these changes proposed this year or last would significantly simplify and improve HSA participation. Although Sen. Kelly’s proposal did not make it into the Omnibus bill signed last week and Sen. Hatch has not reintroduced proposed legislation this year, it seems there is good bipartisan support for stand alone HSA legislation this year.
We will continue to monitor the progress of any HSA improvements and will post updates as they become available.