By Ryan Ellis
Today, the U.S. House of Representatives will pass sweeping expansions of health savings accounts (HSAs) and bring back the health reimbursement arrangement (HRA) for smaller employers.
The news is not so much that a Republican House is passing these bills. Rather, the real story is that they are happening with a whisper and not a roar. In most cases, these measures were reported out of the House Ways and Means Committee by a voice vote. Two of these three measures will pass on the House’s “suspension” calendar, which requires a bipartisan supermajority.
It’s not surprising that HSAs have gone from partisan football to bipartisan cum-bay-yah in recent years. Over 20 million Americansnow have a health insurance plan with an HSA. HSAs are making Obamacare a less unaffordable option for families. They are an integral and growing part of the national health insurance landscape.
The bills in question:
H.R. 1270, the “Restoring Access to Medications Act” is a combination of two bills offered by Congressmen Lynn Jenkins (R-Kan.) and Eric Paulsen (R-Minn.) It would repeal the “medicine cabinet tax” from Obamacare (which prevents over the counter medicines from being purchased with HSA dollars), allow both spouses to make “catch up” contributions to the same HSA, make it easier to pay for expenses incurred before the establishment of an HSA, and roughly double the tax deductible HSA contribution limit so it equals the out of pocket maximum. It is paid for in part by increasing the amount of windfall advanced tax credit under Obamacare which must be paid back to the Treasury.
H.R. 5452, the “Native American Health Savings Improvement Act,” sponsored by Congressman John Moolenaar (R-Mich.) would allow Indians who are enrolled in the Indian Health Service to open HSAs.
H.R. 5447, the “Small Business Health Care Relief Act of 2016,” sponsored by Congressman Charles Boustany (R-La.), restores HRAs for small employers. Under an ill-advised regulatory overreach, the IRS stripped employers of the ability to reimburse employees for the purchase of individual market health insurance or simply for medical expenses. H.R. 5447 partially restores it. Under the bill, a employee’s family plan premiums and other costs can be reimbursed up to $10,260 tax-free (half that for singles), with an inflation adjustment. Even higher reimbursements are allowed for larger families and older employees. This was a common way for very small employers to make sure their employees had health coverage without resorting to setting up a small group health plan. There was no reason for the IRS to get rid of it, and H.R. 5447 restores it.
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