Employers Push HSA Reforms as Lawmakers Mull Spending Bill Riders
(c) Dwight Nadig
Employers and a broad coalition of business groups are working to convince Congress to include a new package of bipartisan health savings account (HSA) reforms in must-pass spending legislation. Lawmakers aim to complete work on the massive $1.2 trillion spending bill and pass it before March 23, when current government funding authority expires.
The proposed HSA changes are contained in the Bipartisan HSA Improvements Act (HR 5138). Introduced on March 1, the bill includes the following revisions to the rules governing HSAs and high-deductible health plans:
- Clarify that enrollment in "excepted benefits" does not jeopardize eligibility to contribute to an HSA
- Provide greater flexibility to offer first-dollar or lower-deductible coverage of health services at onsite medical or retail health clinics
- Permit a beneficiary to contribute to an HSA even if covered by a spouse's general-purpose health flexible spending arrangement (FSA)
- Clarify the definition of an eligible dependent for qualifying HSA medical reimbursements to include children up to age 26
- Allow conversion from a health FSA or health reimbursement arrangement (HRA) to an HSA, and provide more flexibility for converting disqualifying health FSA or HRA benefits to HSA-permitted benefits
- Provide greater flexibility to offer first-dollar coverage of services and medications for certain chronic diseases
- Allow an annually capped amount of HSA dollars to pay for qualified sports and fitness expenses
Despite bipartisan support from lawmakers and — apparently — the Trump administration, it’s not clear if Congress will add these reforms to the spending bill, given their potential price tag and many other competing policy priorities. The outlook is also unclear for other potential health care policy additions, including measures to stabilize the individual market and retroactively waive any employer penalties assessed under the Affordable Care Act’s (ACA's) play-or-pay rules.
White House support for HSA expansion, other health policy reforms. A memo reportedly authored by Trump administration officials outlines the health policy items the White House wants in the spending bill. These items include "expanding Americans' access to HSAs" and raising contribution limits, though increased limits are not proposed in the new legislation. Past GOP legislation has sought to raise the maximum annual HSA contribution to match the statutory high-deductible health plan out-of-pocket limits.
The memo also calls for other health policy changes, including:
- Restore funding for ACA's cost-sharing reduction subsidies that the president cut off in October
- Amend the ACA to let insurers in the individual and small-group markets charge older individuals up to five times as much as younger people, replacing the current maximum allowable premium variation of 3:1
- Allow renewal of short-term policies "without those individuals going through health underwriting," Consistent with the administration's promotion of this type of coverage, IRS, HHS and the DOL recently issued proposed regulations that would and expand the permitted duration of these policies from a maximum of three months to one year.
Lawmakers negotiating stabilization package. The memo does not make a push for state reinsurance programs, which have received bipartisan support from lawmakers negotiating a stabilization package that could clear Congress. Democrats have also advocated increasing ACA subsidies to exchange customers, reinstating funding for exchange outreach and marketing efforts, and curbing the administration's ability to expand the availability of plans that don't meet the ACA's consumer protection standards.
Separately, a prominent coalition of health care providers, insurers, and employer groups issued a March 6 letter to congressional leaders urging inclusion of a reinsurance program and other reforms in legislation to help shore up the individual and small-group market.