New Health Care Bills Are a Step in the Right Direction for Tax-Favored Plans
H.R. 6199 – “Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018.”
H.R. 6311 – “Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018.”
On Wednesday, July 25, 2018, Health Care bills, H.R. 6199 and H.R. 6311, were adopted by the House of Representatives. These bills could expand tax-advantaged health care accounts, including Health Reimbursement Arrangements (HRAs) and Flexible Spending Accounts (FSAs).
Each bill is designed to do something different, but they have one common goal - to enhance and protect health care for all working individuals and families and strengthen the Affordable Care Act (ACA), making sure it stays true to its original promise of lowering health care costs. These laws would not be considered a repeal of the ACA, but a correction to a few provisions in the ACA.
In 2003, consumers were able to use their HRA and FSA to store up to help pay for their medical expenses. At any time throughout the year, you could purchase a bottle of Tylenol, pay for a doctor visit, and pick up a prescription from the pharmacy with your pre-tax dollars. However, in 2011 a provision in the ACA restricted the use of pre-taxed dollars for over-the-counter (OTC) products. In order to use the tax-advantaged health care accounts, consumers had to have a prescription in order to be reimbursed. This created a barrier for employees from buying medication for their seasonal allergies, taking medicine such as Tylenol for their pain management, etc. (Allow HSA dollars to be used for over-the-counter drugs).
With the passing of these Health Care bills, OTC medications will be eligible to be purchased and sports/fitness expenses will be treated as qualified medical expenses for tax-advantaged health care accounts. The way an individual or family can contribute will change, as well as, including being able to contribute to an HSA if their spouse has an FSA. There will also be the option to carry over FSA balances to the following year up to three times the annual limit.
For more in-depth information on the two Health Care bills, please click here. As these bills make their way around Congress, BASE® will continue to keep you updated!
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