The powerful House Ways and Means Committee reported out three bipartisan bills on October 23rd that would expand and improve the flexibility of health savings accounts (HSAs). The three pieces of legislation, which reflects employer recommendations for modernizing and enhancing HSA rules, would make several updates to current law:
- The “Primary Care Enhancement Act” would allow otherwise HSA-eligible individuals who use "direct primary care service arrangements" (DPCSA) to remain eligible to make or receive HSA contributions. Thus, DPCSA coverage would not jeopardize an individual’s HSA-eligibility. For this purpose, a DPCSA is defined as an arrangement under which individuals are provided only primary care services by primary care practitioners, and the sole compensation for such services is a fixed periodic fee. With respect to any individual, the aggregate fees must be capped monthly at $150 for individual coverage and $300 for arrangements that cover more than one individual. The caps would be indexed to inflation. Finally, the bill would allow HSA funds to be used to pay for or reimburse DCPSA fees.
- The “Inhaler Coverage and Access Now Act” (“I CAN Act”) would allow HSA-qualifying HDHPs to cover inhalers for the treatment of any chronic lung disease, or any medicine or drug delivered through inhalers for treating any chronic lung disease, on a pre-deductible basis. (While the IRS recently expanded the list of preventive care benefits that HSA-qualifying HDHPs can (but are not required to) cover before enrollees have met the deductible, that exhaustive list includes only inhaled corticosteroids for asthma. This bill goes further.)
- The “Restoring Access to Medication Act” would repeal the Affordable Care Act’s ban on using HSA funds to pay for or reimburse over-the-counter drugs (unless prescribed). In addition, the bill would allow HSA funds to pay for or reimburse expenses for menstrual care products. Note that these amendments would equally apply to reimbursements from health flexible spending accounts (health FSAs) and health reimbursement arrangements (HRAs).
The Joint Committee on Taxation’s estimated ten-year $11.6 billion price tag for these bills would be partially offset by another measure approved by Ways and Means that would establish a new tax on nicotine used in vaping devices. The vaping legislation is projected to raise $9.8 billion over the same time period.
While the outlook for a House vote and Senate action on the HSA measures is uncertain, their approval by the Ways and Means panel with strong support from members of both parties could set the stage for further action in the 116th Congress.