HSA Update

Regulatory Alert and Legislative Updates

HSA expansion: Not yet passed by House and Senate but in discussions

We continually monitor what happens in Washington regarding HSA regulations and legislation. There is discussion on expanding the benefits of HSAs in several key areas. Although not yet fully enacted, we wanted to share with you what is on the Legislative agenda and what is being discussed. The $92 billion package and new expansions to the HSA below still need to be passed by the full House and Senate and are not in effect today.

To summarize some of the key areas being discussed, here is what we know:

• Gym membership as potential qualified medical expense: The House Ways and Means Committee has passed a bill (H.R. 6312) allowing taxpayers to treat the amounts paid for membership at a fitness facility and gym classes as medical expenses. The bill is known as the Personal Health Investment Today (PHIT) Act. It adds qualified sports and fitness expenses to the definition of qualified medical expenses. The committee approved the bill by a 28 to 7 margin, according to The Wall Street Journal.
• HSA Expansion package: Other bills in the Ways and Means Committee package focuses on allowing more people to invest in HSAs or expanding the medical services and insurance coverage HSA owners can pay for with their funds. One bill (H.R. 6309) would let Medicare Part A beneficiaries currently prohibited from contributing to their existing HSAs once they turn 65 to maintain their accounts. Another bill (H.R. 6199) would allow over-the-counter medicines to count as qualified HSA expenses.
• Increasing maximum HSA limits: One of the bills approved (H.R. 6306), sponsored by Rep. Erik Paulsen (R-MN), would increase the maximum HSA contribution limits so that the limits would be matched to the combined amount of the annual deductible and out-of-pocket limitation of high deductible health plans (HDHP). The current limits on annual contributions that can be made to an HSA for 2018 is $3,450 for self-only coverage and $6,900 family coverage, but under the legislation those limits would nearly double, rising to $6,650 for self-only coverage and $13,300 for family coverage. The legislation would also allow both spouses to make catch-up contributions to the same HSA. Under current law, married spouses who are at least 55 years old can only make a $1,000 catch-contribution to his or her own HSA, but the legislation removes that allocation rule. Thus, spouses would be permitted to contribute their basic and catch-up contribution amounts to one spouse’s HSA.

If you are interested in learning more, here are several articles you can read:

• House committee advances legislation providing tax break for gym membership https://www.accountingtoday.com/news/house-ways-and-means-committee-advances-legislation-providing-hsa-tax-break-for-gym-membership
• House approves HSA expansion package that also takes aim at Obamacare taxes http://www.modernhealthcare.com/article/20180712/NEWS/180719955
• Ways and Means moves on HSAs http://www.asppa-net.org/News/Article/ArticleID/10100
• www.Optum.com