Last week, in a surprising, bipartisan decision, the House of Representatives passed a notable expansion to Health Savings Accounts (HSAs). The bills are on their way to the Senate, where they are expected to pass overwhelmingly. This expansion occurred across three separate acts. These acts combined multiple bills from Republicans and Democrats alike, and they have sweeping effects on Health Savings and Health Reimbursement Accounts.
HR 1270 is cited as the “Restoring Access to Medication of 2015”. This particular resolution:
- Rescinds earlier limits on spouses contributing to the same Health Savings Account
- Allows spouses to make catch-up contributions to the same HSA
- Removes some limitations on how HSAs can be used, including expanding medications that can be purchased with HSAs
- Repeals the “medicine cabinet tax”, which prevented HSA users from spending their account on over-the-counter medicines
- Increases the maximum HSA contribution to the amount of the deductible and out of pocket limitation
- Limits annual increases in subsidy payments.
HR 5447, the “Small Business Health Care Relief Act of 2016”, excludes small businesses from following some IRS laws governing group health plans. The act does this in order to allow small businesses to set up Health Reimbursement Accounts, an ability which had previously been rescinded by the IRS. This act:
- Allows small businesses provide health insurance to their employees without needing to pay for a group health plan
- Lets small employers reimburse an employee, tax free, up to $5,130 for a single health plan
- Provides for $10,260 for most family premiums, with higher amounts for larger families and older employees
Finally, HR 5452, cited as the “Native American Health Savings Improvement Act”, adds additional HSA expansion. It states that individuals eligible for assistance under “Indian Health Services Programs” are still eligible for Health Savings Accounts.
Confused about how these new acts affect your business? Read our Guide to Health Savings Accounts here.