Legislation to expand health savings accounts (HSAs) and increase benefit flexibility, delay the Affordable Care Act (ACA)'s "Cadillac" tax on high-cost plans for another year, and provide retroactive relief from the ACA's employer mandate cleared the House Ways and Means Committee last week as part of an array of health care bills advanced by the panel.
Whether the package will remain intact for purposes of a full House vote is uncertain, however. House Republican leadership may decide bring the HSA reforms to the floor as early as next week along with potential proposals to delay the ACA’s health insurance (HIT) tax and to permanently repeal the law’s medical device tax.
Most of the HSA bills are intended to expand consumer-directed health care by giving HSAs and health plans more flexibility. Many mirror employer recommendations for modernizing the rules, making it easier to include innovative reforms in HSA-eligible high-deductible health plans (HDHPs). The scope of some of these proposals has been scaled back, however, to reduce projected losses in tax revenue, and some may be dropped or modified before a full House vote. Legislation advanced out of the committee would:
- Allow HDHPs to annually cover up to $250 (self-only) or $500 (family) for non-preventive services that could not currently be offered pre-deductible — this could permit limited pre-deductible coverage for services like telehealth or chronic disease management
- Allow individuals who use "direct primary care service arrangements" to be eligible for an HSA and use the account to pay annual or monthly fees affiliated with those services
- Allow individuals to use employers' onsite medical clinics or retail clinics providing certain services without risking HSA eligibility; allow contributions to an HSA without regard to coverage under a spouse's general purpose flexible spending account (FSA); and allow individuals with funds in an FSA to transfer those into an HSA if they become enrolled in a high-deductible health plan
- Change the annual HSA contribution limits to match the annual out-of-pocket maximums for health plans, while also allowing spousal catch-up contributions to the same account when covered under a family HDHP, and create a 60-day grace period for the establishment of an HSA account after the start of HDHP coverage during which medical expenses incurred will be considered qualified
- Allow seniors over age 65 who are entitled to Medicare Part A but continue to work to contribute to an HSA
- Allow individuals to use up to $1,000 in HSA funds to pay for gym memberships, fitness classes, or certain other exercise equipment
- Allow individuals with FSAs to roll over unused balances from year to year
- Repeal the ACA provision that bars individuals from using accounts like HSAs and FSAs to buy over-the-counter medicines; allow these accounts to be used to buy menstrual care products
House action on Ways and Means Committee-approved bills to delay implementation of the ACA’s Cadillac tax on high-cost health plans for one additional year, to 2023, and to suspend the law's employer shared-responsibility rules retroactively from 2015 through 2018, may have to wait until September. Additional employer-focused legislation could also be included, such as a bipartisan proposal to ease employers’ ACA reporting duties.
Republicans are betting that House approval of HSA expansions, ACA employer mandate penalty relief, and delay/repeal of the law’s taxes will show voters progress on health care policy ahead of November’s elections. Despite Democratic support some of these changes, however, their cost, lack of revenue offsets, and a crowded Senate calendar make the outlook for final passage murky.