Yesterday, ECFC sent a letter to the Speaker of the House of Representatives, Paul Ryan, urging the immediate consideration of the health care bills related to consumer-directed health plans that were favorably reported out of the House Ways and Means Committee last week. House Majority Leader McCarthy also announced yesterday that the House will consider several health care related bills next week.
The bills that will be under consideration will include the following provisions:
Over-the-Counter Drugs and Menstrual Care Products. Flexible spending arrangements (FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs) will again be able to reimburse expenses for over-the-counter drugs. In addition, menstrual care products, such as tampons, caps and liners, would be considered medical expenses that can be reimbursed from FSAs, HRAs and HSAs.
Sports and Fitness Equipment. Certain sports and fitness expenses will be considered qualified medical expenses. The bill places limits on the types of expenses that will be considered qualified medical expenses and places dollar limits on the amount of those qualifying expenses. Sports and fitness expenses that qualify as medical expenses would be limited to $500 per year for single tax return filers and $1,000 per year for joint return filers and sports safety equipment is limited to $250 per year for single tax return filers and $500 per year for joint filers. The administrative challenges in using debit card technology to provide reimbursements from FSAs and HRAs caused by these limits that we raised were not addressed in the legislation that will be considered by the full House.
On-Site Health Clinics. On-site health clinics and certain retail clinics provided by an employer will not cause its employees to be ineligible to contribute to an HSA.
Direct Primary Care Arrangements. Payments for direct primary care arrangements would not be considered coverage below the deductible so that the individual can contribute to an HSA. The direct primary care arrangement is where an individual makes a monthly payment of not more than $150 ($300 if such arrangement covers more than one person) to receive unlimited primary care health services during that month.
FSA/HSA Interaction. An individual will be eligible to contribute to an HSA if the individual’s spouse has an FSA, but only if the spouse’s FSA cannot reimburse that individual’s medical expenses. Also, FSA and HRA balances can be used to fund an individual’s HSA under certain situations.
Increased HSA Contribution Limits. The amount that an individual can contribute to an HSA will be increased to the annual out-of-pocket limit for an HSA-qualified high deductible health plan (HDHP).
Expansion of Who Can Contribute to an HSA. Individuals that are entitled to Medicare Part A can contribute to an HSA if they have an HDHP. Similarly, individuals who have bronze or catastrophic coverage will be eligible to contribute to an HSA.
HSA Housekeeping Issues. Spousal catch-up contributions can be made to the same HSA account, rather than separate accounts for each spouse. Also, an issue of reimbursements of medical expenses in the first year that an HSA is established is addressed. Current law requires that only medical expenses incurred after the establishment of the HSA can be reimbursed from that HSA, even if the high deductible health plan was in effect when the medical expense was incurred. That problem would be eliminated so that medical expenses incurred after the high deductible health plan was in effect would be eligible as long as the HSA is established within 60 days of the effective date of coverage under the high deductible health plan.
FSA Carryforward. Under current IRS guidance, a health FSA can provide for a carryforward of unused balances of $500 or less into the following year. The carryforward rules would be modified so that unused balances in a health FSA of up to three times the amount of the annual cap on FSA contributions can be carried forward to the following year.
Modification of the ACA Premium Tax Credit. The health plans that are eligible for the ACA premium tax credit will be changed.
Medical Device and Health Insurance Tax. The excise tax on sales of medical devices added by the Affordable Care Act will be repealed for sales occurring after December 31, 2017, and the health insurance tax (currently set to apply in 2018, but not 2019) would not apply again until 2022.
The bill to delay the implementation of the excise tax on high cost health plans (referred to as the “Cadillac Tax”) that was favorably reported out of the Ways and Means Committee last week was not included with the other bills that will be voted on next week. We understand that the House will consider the bill to delay the Cadillac Tax in September and ECFC will continue to press for the full repeal of the tax. It is not yet clear whether or when the Senate will address these issues. We will continue to keep ECFC membership apprised on the status of these bills and our efforts to have the Senate also address these issues.