A timely blog post published by Tracy Watts, a senior partner and the U.S. leader for health care reform at Mercer, spells out the main takeaways from this week’s action on health savings accounts (HSAs) in Congress.
As Watts points out, House and Senate committees have held several hearings over the past few months on how to expand HSAs. This week representatives cleared two health care bills containing a broad array of policy changes.
“Although budget pressures have put limits on some reforms and the Senate outlook this year is dim, the proposed changes indicate the direction that many Republicans and more than a few Democrats would like to take,” Watts writes. “If you have suggestions and or would like to express support, now is a good time to let your members of Congress know, or work through employer advocacy groups in Washington.”
Watts explains that many of the proposed changes affect “how and when a person can contribute to an HSA and how the funds can be used and rolled over.”
“These types of changes will require employee notification and communications as well as enrollment system/payroll changes, but will be relatively straightforward to implement,” she feels. “HSA account administrators will need to modify their systems for the new limits and additional services that are eligible for HSA use/reimbursement, and to track the source of funds.”
According to Watts, one HSA expansion provision is not so straightforward: Allowing high deductible health plans (HDHPs) to cover up to $250 (self-only) and $500 (family) annually for non-preventive services that currently may not be covered pre-deductible.
“This will allow pre-deductible coverage for chronic condition treatment and telehealth services, for example,” Watts writes. “It could also be challenging to administer. Will employers need to define a specific additional service, or multiple services, the plan will cover pre-deductible up to the limit? Could that be complicated by geographic variations in the cost of care? Or will plan sponsors stick to easy-to-define services: telemedicine consultations and medication for high blood pressure, high cholesterol, and diabetes?”
Watts further warns employers that, while this may be a small amount per person, it could add up quickly for large groups.
“Employer groups will continue to urge Congress and regulators to provide greater flexibility to cover more services on a pre-deductible basis,” Watts adds.
Watts says her best advice is to “keep an eye on what Congress is doing.”
“Communicate your preferences on this topic to your elected representatives,” she suggests. “Chat with your insurance carrier and HSA vendor to see what they are thinking regarding how to define, and administer, the additional $250/$500 for non-preventive services pre-deductible. We will continue to track and write about this.”
Other providers have weighed in
Another early blog post published by the public policy and legislation team at Alegeus is more technical, noting that since July 11, when the House Ways and Means Committee first marked up these bills, 10 of their 11 provisions have quickly moved through the House of Representatives.
“As of yesterday, two bills (H.R.6199: Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018 and H.R.6311: Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018) were adopted by the House of Representatives,” the blog post states. “On July 19, 2018, the House Rules Committee released two HSA-related bills (Rules Committee Prints 115-82 and 115-83) that re-packaged 10 of the 11 bills approved by the House Ways & Means Committee on July 12 into two separate bills. On July 23, these bills (H.R.6199 and H.R.6311) were party-line approved 8-4 by the House Rules Committee. Two amendments were offered during the proceedings, both of which failed. As a result, the two bills moved on to the House floor for final passage vote on Wednesday, July 25, under a closed-rule process.”
According to Alegeus’ count, the H.R.6199 vote was 277-142 (R: 231-1; D: 46-141) and the H.R.6311 vote was 242-176 (R:230-1; D: 12-175). Additionally, the Joint Committee on Taxation (JCT) has prepared a revenue estimate that is publically available.
The full text of the Alegeus blog post includes substantial explanatory information about both H.R. 6199 and H.R. 6311. One important note in the blog post is that a provision to delay the “Cadillac plan tax” was not included in the either approved bill. However, H.R.5963, a bill to delay the tax on health insurers, which was not considered by the Ways & Means Committee, was added to H.R.6311 by the House Rules Committee, Alegeus reports.
Among other provisions, H.R.6199 modifies the treatment of Direct Primary Care Service Arrangements so that such arrangements are not treated as a health plan that would disqualify an individual from contributing to an HSA, and it allows HSA funds to be used tax-free to pay for periodic fees for direct primary care arrangements that do not exceed $150/month or $300/month in the case of families. Also notable, the bill reverses the Affordable Care Act’s restriction that requires a prescription for tax-free reimbursement of over-the-counter medicines from HSAs, flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and Archer medical savings accounts (MSAs), and it adds menstrual care products as a qualified medical expense for tax-free reimbursement.
As Alegeus explains, the second bill, H.R.6311, allows HSA-eligible working seniors enrolled only in Medicare Part A to contribute to their HSAs, and it deems Bronze and Catastrophic plans as HSA-qualified plans. Like Mercer’s public policy team, the experts at Alegeus pledge to track this issue closely in the Senate as the year progresses.