HSA Expansion Bills Approved by Ways and Means

HSA Expansion Bills

Americans would have more opportunities to save for and afford health care costs under legislation approved today by the House Ways and Means Committee. The Bipartisan HSA Improvement Act of 2023 and the HSA Modernization Act of 2023 would make health savings accounts (HSAs) more accessible and useful for patients and families. The legislation is now cleared for consideration by the full House of Representatives.

Bipartisan HSA Improvement Act (H.R. 5688)

  • Allows individuals who utilize key health services such as direct primary care arrangements and worksite health clinics to use their own resources to contribute to health savings account funds.
  • Eliminates a prohibition against an individual establishing an HSA if their spouse has an existing flexible spending account (FSA).
  • Allows individuals to convert certain amounts of their FSA or health reimbursement arrangement (HRA) dollars into an HSA. (This provision is similar to one in the Health Opportunity Empowerment Act of 2006 that expired in 2012.)

HSA Modernization Act (H.R. 5687)

  • In what might be the most significant change between the two bills, H.R. 5687 would increase the HSA contribution limit to a sum equal to that of the annual deductible and out-of-pocket limitation permitted for high-deductible health plans (HDHPs). This proposal would be effective for tax years beginning after 2025. (Had this legislation been law in 2023, the HSA annual contribution limit would have been $7,500 for self-only coverage and $15,000 for family coverage, instead of $3,850 and $7,750, respectively.)
  • Expands HSA eligibility to the following individuals, among others:
    • Veterans receiving care through the Veterans Administration
    • Working seniors enrolled in Medicare Part A
    • Persons enrolled in Catastrophic and Bronze plans on the healthcare exchange
    • Native Americans
  • Allows spouses to contribute “catch-up” funds into the same HSA rather than having to establish separate accounts for such contributions.
  • Allows an individual’s HSA funds to cover health care services that occurred up to 60 days before the health savings account was established.
  • Increases access to mental health and home health care services for those still contributing to an HSA.

IMPORTANT NOTE:  It’s important to stay up-to-date on legislative and regulatory effects that may affect employers and employees. Contact your third-party administrator (TPA) or qualified benefits counsel to determine the best direction for your employer plans. The above is for informational purposes only and should not considered legal advice or an all-inclusive summary.

For 40 years, DataPath has been a pivotal force in the employee benefits, financial services, and insurance industries. The company’s flagship DataPath Summit platform offers an integrated solution for managing CDH, HSA, Well-Being, COBRA, and Billing. Through its partnership with Accelergent Growth Solutions, DataPath also offers expert BPO services, automation, outsourced customer service, and award-winning marketing services.

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