Breaking news from Washington, D.C. confirms the House of Representatives adopted two health care bills in late July 2018. In general, if these bills are passed they would allow for more flexibility in the definition of a High Deductible Health Plan (HDHP) and how healthcare consumers can spend their savings for medical related requirements.
The bills, H.R. 6199 and H.R. 6311, expand tax-advantage health care accounts, inclusive of Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs). These bills are broader than the versions passed by the House Ways and Means Committee recently as they also include aspects of other bills that had been previously approved by the Committee. The bills presented also received significant democratic support.
Here’s a breakdown of the two bills:
The Restoring Access to Medication and Modernizing Health Savings Accounts Act, H.R. 6199, was passed by a margin of 277 to 142. This bill would:
- Allow individuals to purchase over-the-counter medical products by reversing the Affordable Care Act’s (ACA’s) prohibition on using tax-favored health accounts. And, prescriptions would not be required for eligibility purposes.
- Treatment of menstrual care products as qualified medical expenses with all tax-advantaged health care accounts.
- Treatment of certain sports and fitness expenses – including gym memberships and costs associated with participation in certain physical exercise programs. These items would be recognized as qualified medical expenses up to a limit of $500 per year for individuals and $1,000 per year for a family.
- Allow HDHPs coverage up to $250 for individuals and $500 for families on an annual basis for non-preventive services not currently covered as pre-deductible. Limited coverage outside the deductible would be allowed, i.e., for chronic condition treatments and telehealth services.
- Allow individuals with HSA-qualifying family coverage to make contributions to an HSA if their spouse is enrolled in a medical FSA, which is currently not permitted.
- Permit the use of employer-sponsored onsite medical clinics and other employment-related health services without imposing a risk to HSA eligiblity, as long as significant benefits are not provided.
- Recognize direct primary care (DPC) provider fees as covered with HSAs and capped monthly at $150 per individual and $300 per family.
- Shield HSA-eligible individuals who participate in a DPC from losing their HSA eligibility.
- Increase HSA 2018 annual contribution to $6,650 for individuals and $13,300 for families. This represents the 2018 combined annual limit on out-of-pocket and deductible expenses under an HSA qualified insurance plan.
- Allows HSAs to cover qualified medical expenses at the start of the HDHP coverage if accounts are opened within 60 days after coverage under an HDHP begins. This proposal includes a reasonable grace period between the timeframe the HDHP coverage starts and the set-up of the HSA.
- Allow employees with an FSA or an HRA who enroll in a qualifying HDHP with an HSA to transfer balances from their FSA or HRA to their HSA. Transfers would be capped at $2,650 for individuals and $5,300 for families. This option is offered at the employer’s discretion.
- Allow for health FSA balances to carry over to the following plan year. The carry over option could not exceed 3 times the annual FSA contribution limit.
- Allow for spouses 55 years of age and older (currently only available for account holders) to make an annual catch-up contribution to an HSA that’s linked to a health plan providing family level coverage. The extra contribution amount cannot exceed $1,000.
- Permit working seniors who participate in Medicare Part A and covered by a qualifying HDHP to contribute to an HSA.
What to expect next?
Senate approval is needed by year-end for both bills to become law. Analysts predict the likelihood of that happening to be challenging. Also, on the horizon – in September 2018, the House is also expected to vote on several of the other ACA related measures that were previously passed by the Ways and Means Committee. These bills include H.R. 4616, which is designed to delay the Cadillac Tax until 2021 and to also suspend the ACA employer mandate penalties for plan years through 2018.
GovTrack – H.R. 6199 & H.R. 6311
Congress.gov – H.R. 6311 & H.R. 6199