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On July 25, 2018, the House of Representatives passed two HSA-related bills, H.R. 6199 and H.R. 6311.  Both bills aim to expand contributions and access to Health Savings Accounts.

 

Key points of H.R. 6199 – “Restoring Access to Medication Act and Modernizing Health Savings Account Act of 2018”

  • The bill (if it becomes law) would take effect in 2019.
  • First-Dollar HDHP Coverage: Allows high deductible health plans to provide coverage for services before the deductible is met up to $250 a year for an individual and $500 a year for family coverage.
  • On-Site Care: Allows employers to offer free or discounted services at on-site or retail medical clinics without disqualifying an HDHP enrollee from contributing to an HSA so long as significant medical care benefits are not provided.
  • Spousal Healthcare FSA: Allows contributions to an HSA even if an enrollee’s spouse has an FSA.  Under current law, being eligible for benefits under an FSA disqualifies an otherwise eligible FSA enrollee’s spouse from contributing to an HSA.
  • Conversion of HRA & FSA Balances to Fund an HSA: Would allow conversion of an FSA or HRA balance into an HSA contribution upon enrolling in a high deductible health plan with an HSA. The conversion amount would be capped at $2,650 for an individual and twice that amount for family coverage.
  • Over-the-counter-products as Qualified HSA Expenses: Includes certain over the counter medical products as qualified medical expenses and also adds women’s menstrual care products as HSA qualified expenses.
  • Sports and Fitness Medical Expenses: Adds sports and fitness expenses to the list of tax deductible medical expenses (including HSA qualifying expenses) up to a limit of $500 per year for an individual and $1,000 per year for those filing a joint tax return.

 

Key points of H.R. 6311 – “Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018”

  • Healthcare FSA Carryover: Allows FSA balances to be carried over into the next year so long as the balance does not exceed 3 times the annual FSA contribution limit.
  • HSA and Medicare: Allows individuals enrolled under Medicare Part A to contribute to an HSA.
  • Increased HSA Contribution: Allows HSA contribution amounts equal to the combined annual limit on out-of-pocket and deductible expenses under an HDHP plan, which would be $6,650 for an individual and $13,300 for a family in 2018.
  • Catch-up Contributions: Would allow both spouses to make catch-up contributions into the same HSA account. Current law requires spouses to open separate HSA accounts for respective cacth-up contributions.
  • Retroactive HSA: Would allow HSA funds to be used within 60 days of gaining coverage under an HDHP.  Currently, the law only allows HSA funds to be used for expenses incurred after the HSA account was opened.
  • HSA for Bronze Level or Catastrophic Plans:  Would allow HSA eligibility for those enrolled in bronze plans or catastrophic/copper plans.
  • Tax Delay: The bill delays the annual fee on health insurers until 2022.

 

Employer Action Items:

  • There are no action items for employers at this time.  These bills have not yet become law; they will now go to the Senate for consideration.

 

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Joanna Castillo– Joanna is the Client Compliance Manager for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Joanna enjoys live music, college football, travel, and walking her dog in Golden Gate Park.