While there is no substitute for the ACA (Affordable Care Act) agreed upon yet, the HSA (Health Savings Account) clauses in the now defunct House and Senate healthcare legislation might be considered by Congress. In all likelihood, legislation solely relating to HSAs will be rolled out with extra changes to the ACA. The attempt to repeal and replace the ACA came to a grinding halt on July 18, which left in place the employer reporting and coverage rules stipulated in the ACA. The republican’s House and Senate policies to overhaul the ACA featured laws that would broaden the adaptation of HSAs. Because these measures were rejected by the Senate, more focus is being placed on introducing HSA reforms separately.
Republicans included policies in their suggested ACA repeal legislation to reduce limitations and increase contributions to HSAs. In the ACA, the HSA distribution tax for nonmedical costs is twenty percent. HSA money cannot be used to buy medication from a chemist, unless patients have a prescription. Also, HSAs are not allowed to reimburse any costs incurred prior to setting up the account.
Republicans had suggested permitting HSA money to be used to buy medication from a chemist without prescription. They wanted to reduce the HSA distribution tax for nonmedical costs to ten percent. They proposed to allow the use of HSAs to pay health insurance costs for individual plans. This includes Medigap (Medicare supplemental) health plans. They said that HSAs could be used to recover costs incurred for as long as sixty days before accounts were set up, providing individuals were qualified to set up accounts throughout that period. Also, they said HSAs should be allowed to pay for the medical costs of non-dependent adult children, as stipulated by the account owner’s health plan.
Presently, the 2018 limits for HSA contributions are $6900 for family coverage and $3450 for self only coverage. Additionally, there is a $1000 catch up contribution for people aged fifty-five and older. However, HSA account holders are the only ones who can make catch up contributions. Republicans had suggested permitting spouses aged fifty-five and older to pay contributions to HSAs. Also, they wanted to almost double the yearly HSA contribution limit to reflect the limits that are used for high deductible health insurance plans.
Another frequently referred to HSA reform that is not present in the republican bills, would permit HSAs to fund health services under any type of health plan, overriding the existing law that HSAs can be combined only with HDHPs (high deductible health plans). The health care legislation from the republicans would have eradicated the ACA’s limit on staff contributions to FSAs (flexible spending accounts). This legislation would allow employers to restrict staff contributions to FSAs.
The Society for the Management of Human Resources agrees that the limitations on HSA contributions and FSAs do need to be eased. The organization has said that promoting HSAs will enable employers to provide a range of benefits that best satisfy the requirements of their staff. Also, it will offer extra medical financial support and notable relief for staff.
Bottom-line: healthcare legislation is ever-changing and complex, and will continue to pose complications for those of us in the Human Resources industry.