Since the Affordable Care Act was signed into law six years ago, you have likely been introduced to a whole new vocabulary of do’s and don’ts. However, a recent bill gives us hope for a more simplified approach to HSAs. The Health Savings Act of 2016 was introduced to provide some common sense solutions to HSAs and other pre-tax benefit accounts.
Here are the Top 7 Common Sense HSA Solutions proposed:
- Rename the underlying insurance as “HSA-eligible health plan” rather than “High deductible health plan”. This eliminates confusion regarding which plans qualify and reduces the negative stigma attached to the phrase “high deductible”.
- Allow spouses to make a catch-up contribution to the same HSA account. This would provide added convenience for families accessing funds from the same account and likely reduce their overall administrative costs.
- Allow individuals enrolled in Medicare Part A to continue to contribute to their HSA. Enrollment in Medicare Part A is automatic or difficult to decline, but currently prevents many otherwise eligible participants from contributing to an HSA.
- Allow individuals eligible for limited medical services to contribute to an HSA. This includes individuals eligible for Indian Health Service Assistance, TRICARE and individuals eligible for on-site medical clinic coverage with limited health care benefits.
- Allow individuals to use HSA, FSA, and HRA funds to purchase over-the-counter medicines and drugs without a prescription. The Affordable Care Act had forced individuals to receive a prescription in order to use account funds for over-the-counter medicines and drugs.
- Expand provisions to roll unused FSA and HRA funds to an HSA. Lifting some of the restrictions on rolling funds from an FSA or HRA will help individual to ease into an HSA.
- Exclusion of employee pre-tax contributions from the calculations for the Cadillac Tax. Since employee pre-tax contributions are employee-directed funds rather than employer funds, it makes sense to exclude these funds from the Cadillac Tax calculations and allow employees to save for increasing out-of-pocket expenses.
While these are common sense changes, which generally have bipartisan support, we know the legislative process is complex. We encourage you to reach out to your Representatives and Senators to show your support for the Health Savings Act of 2016.