Despite repeated Republican failures to pass a repeal-and-replace version of the Affordable Care Act — or just a repeal — there are some provisions from the House and Senate bills that just won’t die.

Among them are proposed regulations surrounding health savings accounts, which might resurface as independent legislation, according to Chatrane Birbal, senior advisor for government relations at the Society for Human Resource Management. In a report from SHRM, Birbal says that “HSA stand-alone legislation will likely be introduced with additional modifications to the ACA.”

Both the House and Senate efforts at repeal-and-replace sought to boost the use of HSAs, but now that the Senate has failed to garner enough votes to proceed, legislators are turning their attention to bringing back HSA-related provisions in separate legislation that would raise contribution levels for HSA accounts and loosen restrictions on their use.

At present, contributions limits for 2018 are set at $3,450 for self-only coverage and $6,900 for family coverage, plus a $1,000 catch-up contribution for those ages 55 and older — the latter of which can only be made by the account holder.

But Republicans had proposed nearly doubling annual HSA contribution limits to equal out-of-pocket maximums applying to high-deductible health plans. For 2018, the limits are $6,650 for self-only coverage and $13,300 for family coverage, plus the $1,000 catch-up contribution for those ages 55 and older. In addition, they had suggested allowing spouses aged 55 and older to make catch-up contributions to the same HSA.

But they didn’t stop there, proposing that the ACA tax on HSA distributions for nonmedical expenses, currently 20 percent, be lowered to 10 percent — its pre-ACA level. Proposals also included allowing HSA funds to be used for over-the-counter medical items, as well as permitting reimbursement of expenses incurred up to 60 days before the account is established, if the individual was eligible to open an account during that period.

The GOP had also proposed allowing HSAs to be used to pay health insurance premiums for individual-market plans, including Medicare-supplemental, or Medigap, health plans, and also allowing HSAs to reimburse medical expenses of nondependent adult children covered under the account holder’s health plan.

The Republican bills also sought to eliminate the ACA’s cap on employee contributions to flexible spending accounts, which were originally set at $2,500 and indexed for inflation. Currently the limit for 2017 is $2,600. Republicans would have allowed employers to limit employee FSA contributions.

And while it wasn’t included in the Republican bills, there’s been talk of allowing HSAs to pay for health services under all types of health plans, thus eliminating the current rule that HSAs may only be coupled with high-deductible health plans.

The danger is that such changes could result in HSAs becoming a benefit just for those with high incomes, and those who understand how they work who are comfortable with such features as investing within the account.

One expert quoted in the report, John Lowell, a benefits and compensation consultant based in Woodstock, Georgia, says that with all the deductions already coming out of a typical employee’s paycheck—federal income taxes, FICA taxes, health benefit costs, 401(k) deferrals and other benefit costs—“there may not be enough left over for the day-to-day costs of living, let alone HSA deferrals” for moderate income employees.

In addition, he says, “If participation in an HDHP is an entrance requirement, your average participant just doesn’t care about the possible benefits of a health savings account.”

Others, of course, disagree, but the fact remains that upping participation in HSAs could be a challenge. “There is a difference in encouraging employees to save through HSAs and employees actually saving,” Perry Braun, executive director of the Benefit Advisors Network, a Cleveland-based consortium of health and welfare benefit brokers, says in the report. Braun adds, “The key question is, given the earnings of the workforce today, do they have the financial resources to save for future health expenses?”

Instant Insights /

HSA provisions from failed health care bills could resurface

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