Hoping to make it more cost-effective for employees to use health savings accounts, the House passed two bills that raise contributions and expand the list of qualified medical expenses.
The House of Representatives recently approved legislation aimed at making health savings accounts (HSAs) more cost-effective and practical for employees. The body voted on two bills, one that would broaden the list of services permitted for reimbursement with HSAs and another that would raise the contribution limits to such accounts. Both measures will be sent to the Senate for discussion and a vote.
The first bill, the Restoring Access to Medication and Modernizing Health Savings Accounts Act, would cover certain healthcare services before a meeting a deductible. It passed 277-142. The Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018 passed with a 242-to-176 vote. That bill would raise the amount employees could put into an HSA.
HSAs allow members of high-deductible healthcare plans — $1,350 for an individual and $2,700 for a family — to use the money they contribute into the account to pay for qualified medical expenses. The enrollee, a spouse, or dependent can be listed as beneficiaries of the HSA.
If these HSA bills become law, employees with access to them will be able to boost their tax-free contributions and get reimbursed for services now subject to a deductible. Employers may see benefits, too. So far, employers have had issues with the restrictions on HSAs, something these bills would ease.
Contribution Limits LiftedThe current limit on contributions to HSAs is set at a maximum of $3,450 for a single member, and $6,900 for family coverage. Under one of the House’s proposals, the individual limit would be raised to $6,650 for individuals and $13,300 for families. In addition, both spouses would be permitted to make catch-up contributions of up to $1,000 once they turn 55. Previously, only the spouse enrolled in the HSA could do so. The bill would also open participation in HSAs to Medicare Part A beneficiaries.
The second bill addresses what medical services would qualify for full HSA payment without deductibles, copays, or coinsurance. If enacted into law, HSA enrollees could use their funds to cover over-the-counter medications, primary care visits, and even gym memberships. Current HSA law requires all services except specified preventative care be subject to a deductible.
Suspension of Health Insurance TaxA companion bill to the HSA measures would postpone implementation of the health insurance tax for two years, an action the insurance industry applauded. UnitedHealth Group CEO David Wichmann stated that imposing such a tax would increase premiums.
America’s Health Insurance Plans (AHIP) threw its support behind all three bills, as well. In a statement, AHIP President and CEO Matt Eyles said the proposals “will make healthcare more affordable by suspending taxes that push up premiums and modernizing HSAs so pre-tax dollars can be more effectively used to meet the healthcare needs of American families.”
The popularity of HSAs among employers and workers appears to be growing. According to a United Benefit Advisor 2016 survey on health plans, about 25% of employer-sponsored health insurance programs had an HSA attached. Five years earlier, the percentage was about 22%. Enrollment in HSAs stood at 17% overall, up 26% from 2015 and 140% from 2011.
Expanding the menu of HSA-qualified medical services and raising the maximum contributions could boost those numbers further. Insurance agents who work with clients that have employer-sponsored health insurance should encourage them to enroll in an HSA if presented with the opportunity. It could be a practical way to manage the rising cost of healthcare across the board.