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The Two Pieces of a Properly Implemented High-Deductible Insurance Arrangement

Created May 28th, 2010 by HDHPexpert                                                                              Print

Health Care Reform’s Effect on Health Savings Accounts

Created May 27th, 2010 by HDHPexpert                                                                              Print

After 12/31/10, over-the-counter items will not be Health Savings Account (HSA) eligible expenses.

An excerpt from “Legislative Digest”, as it relates to H.R. 4872, posted on http://gop.gov

HR 4872 Full Text, VERSION APPROVED BY THE HOUSE ON MARCH 21, 2010.  “ENGROSSED IN THE HOUSE”

Taxes on Health Plans:  The [H.R. 4872] bill prohibits the reimbursement of over-the-counter pharmaceuticals from Health Savings Accounts (HSAs), Medical Savings Accounts, Flexible Spending Arrangements (FSAs), and Health Reimbursement Arrangements (HRAs), and increases the penalties for non-qualified HSA withdrawals from 10 percent to 20 percent, effective in 2011.  Because these savings vehicles are tax-preferred, adopting these provisions would raise taxes by $6.3 billion over ten years, according to the Joint Committee on Taxation.

The bill would place a cap on FSA contributions, beginning in 2012; contributions could only total $2,500 per year, subject to annual adjustments linked to the growth in general (not medical) inflation. Members may be concerned that these provisions would first raise taxes by $13.3 billion, and second-by imposing additional restrictions on health savings vehicles popular with tens of millions of Americans-undermine the promise that “If you like your current coverage, you can keep it.”  At least 8 million individuals hold insurance policies eligible for HSAs, and millions more participate in FSAs.  All these individuals would be subject to additional coverage restrictions-and tax increases-under this provision.

The bill raises the threshold to itemize health expenses from 7.5 percent to 10 percent of adjusted gross income, beginning in 2013; seniors over age 65 would receive a four-year extension of the 7.5 percent income threshold for four additional years (i.e. until 2017).  This provision would raise taxes by $15.2 billion.  The bill also repeals the current-law tax deductibility of subsidies provided to companies offering prescription drug coverage to retirees, raising taxes by $5.4 billion.  Many may be concerned that this provision would lead to companies dropping their current coverage as a result.

Source

Health Savings Accounts – HSA’s – Video Diagram

Created May 26th, 2010 by HDHPexpert                                                                              Print