House Bill Would Ease Health Account Rules

June 9, 2003 ( - American consumers may have an easier time pay for health care if a proposed new health savings account (HAS) is enacted into law.

>HR 2531, sponsored by US House Ways and Means Committee Chairman William Thomas (R-California), would free the health accounts of many of the current rules, according to Washington-based legal publisher BNA. Representative William Lipinski (D-Illinois), who also is a member of the Ways and Means panel, is cosponsoring the bill.

“HSAs help put individuals in control of their own health care, while helping manage health care’s rising costs,” Thomas said in a press release. Lipinski added that the legislation “would lower health care costs for everyone involved, provide more choices, and further extend the accessibility and affordability of health care to the unemployed and the uninsured.”

Like medical savings accounts (MSAs), HSAs would be teamed with high-deductible health policies to help consumers pay medical expenses. Employees would be able to set aside money in HSAs through employer contributions, their own contributions, and tax-free rollovers of part of unused flexible spending account balances, according to the BNA report.

Under the bill, HSAs could be established in connection with a health insurance policy providing a minimum deductible of $1,000 and workers would be able to take HSAs with them from one job to another. Also, HSAs could be funded with both employer and employee contributions, another change in MSA policy that Thomas has sought.

Under the Thomas bill, HSAs would be permanent features of the tax code, different from MSAs, which were established in the 1996 Health Insurance Portability and Accountability Act as part of a pilot project that Congress periodically has extended (See  MSAs Going, Going, Gone? ).

Annual contributions to HSAs equaling up to 100% of the accompanying health policy’s deductible would be permitted under the bill. Preferred provider organizations and cafeteria plans would be permitted to offer them. There would also be no cap on taxpayer participation, while MSA participation is limited to 750,000 taxpayers under current law (not that it shows much sign of challenging that cap, see  Archer MSA Usage Lags Limit; Program Not Cut Off ). Also, HSA holders would be permitted to roll over unspent flexible spending account balances of up to $500. Under current law, those with unused FSA balances forfeit the funds at the end of the calendar year.