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1. Section 110201: "Treatment of health reimbursement arrangements integrated with individual market coverage."
Individual coverage health reimbursements, or ICHRAs, now offer employers a way to provide cash that workers can use to buy their own individual health coverage.
The ICHRA program is based on regulations, and employers cannot offer the same employee a choice between an ICHRA account and ordinary health insurance.
Section 110201 would make the ICHRA rules federal law, change the name of the ICHRA to the "custom health option and individual care expense arrangement," or CHOICE arrangement, and let employers give workers a choice between CHOICE arrangements and ordinary fully insured health insurance.
Credit: Shutterstock
2. Section 110202: "Participants in CHOICE arrangement eligible for purchase of Exchange insurance under cafeteria plan."
This bill would help eliminate an individual coverage health reimbursement arrangement gap.
Employers can get a tax break for paying for group health coverage, but workers cannot use ICHRA cash to pay for individual coverage from Healthcare.gov or another Affordable Care Act health insurance exchange on a pretax basis.
Section 110202 would let workers who get the new type of cash-for-coverage HRA, the CHOICE arrangement, through a cafeteria plan keep the HRA cash spent on individual major medical coverage out of their taxable income.
3. Section 110203: "Employer credit for CHOICE arrangement."
This provision provides a tax credit of $100 per month per employee enrolled in a CHOICE plan when the plan provides major medical coverage that provides affordable minimum essential coverage that provides at least bronze-level benefits, or benefits that cover about 60 percent of the value of the official "essential health benefit" package.
4. Section 110204: "Individuals entitled to part A of Medicare by reason of age allowed to contribute to health savings accounts."
Today, people who turn 65 and are eligible for Medicare Part A hospitalization coverage cannot continue to contribute to HSAs.
This provision would let people who are eligible for Medicare continue to contribute to HSAs.
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5. Section 110205: "Treatment of direct primary care service arrangements."
This provision would let the owner of a health savings account pay the dues for a "direct primary care practice," or subscription-based primary care program.
The limit would be $150 per month for an individual and $300 per month for a family.
6. Section 110206: "Allowance of bronze and catastrophic plans in connection with health savings accounts."
Workers with health savings accounts are supposed to have high-deductible health coverage, to give them "skin in the game" and make them careful healthcare shoppers.
But the eligible high-deductible coverage is supposed to have a reasonably low cap on maximum annual out-of-pocket spending.
The annual out-of-pocket spending caps on ordinary bronze-level and catastrophic major medical insurance policies are now high enough that people with those levels of coverage cannot contribute to HSAs.
This provision would make ordinary bronze-level and catastrophic-level health insurance policies compatible with HSAs.
7. Section 110207: "On-site employee clinics."
Today, regulators say having access to an employer's health clinic violates the principle that an HSA holder should have a high-deductible health plan.This provision would let workers with access to on-site clinics contribute to HSAs.
9. Section 110208: "Certain amounts paid for physical activity, fitness, and exercise treated as amounts paid for medical care."
This provision would let HSA owners use the cash to pay the dues for fitness facilities. The limit would be $500 for an individual and $1,000 for a family.
9. Section 110209: "Allow both spouses to make catch-up contributions to the same health savings account."
This provision would let a couple that's 55 or older add up to $1,000 in extra catch-up contributions per year to an HSA.Advertisement
10. Section 110210: "FSA and HRA terminations or conversions to fund HSAs."
This provision would let a worker with a flexible spending arrangement or health reimbursement arrangement that's terminating roll some unused value into a health savings account. The amount shifted would be limited to the annual FSA contribution limit. This year, that's $3,300.
11. Section 110211: "Special rule for certain medical expenses incurred before establishment of health savings account."
This powerful provision would let an individual use cash contributed to an HSA use distributions to pay for health care expenses incurred up to 60 days before the HSA was formed.
12. Section 110212: "Contributions permitted if spouse has health flexible spending arrangement."
This would let one spouse contribute to a flexible spending arrangement and the other contribute to a health savings account.Today, the spouse of someone with an FSA cannot normally contribute to an HSA.
13. Section 110213: "Increase in health savings account contribution limitation for certain individuals."
This section could increase the maximum HSA contribution, using an income-based formula.For individuals making $75,000 per year, for example, the limit would increase to $8,600, from $4,300 today.
For couples making $150,000 per year, the limit would increase to $17,100, from $8,550.
14. Section 110214: "Regulations."
This provision authorizes the Treasury secretary and the Health and Human Services secretary to develop the rules and guidance needed to implement the new health account laws.Advertisement
1. Section 110201: "Treatment of health reimbursement arrangements integrated with individual market coverage."
Individual coverage health reimbursements, or ICHRAs, now offer employers a way to provide cash that workers can use to buy their own individual health coverage.
The ICHRA program is based on regulations, and employers cannot offer the same employee a choice between an ICHRA account and ordinary health insurance.
Section 110201 would make the ICHRA rules federal law, change the name of the ICHRA to the "custom health option and individual care expense arrangement," or CHOICE arrangement, and let employers give workers a choice between CHOICE arrangements and ordinary fully insured health insurance.
Credit: Shutterstock
2. Section 110202: "Participants in CHOICE arrangement eligible for purchase of Exchange insurance under cafeteria plan."
This bill would help eliminate an individual coverage health reimbursement arrangement gap.
Employers can get a tax break for paying for group health coverage, but workers cannot use ICHRA cash to pay for individual coverage from Healthcare.gov or another Affordable Care Act health insurance exchange on a pretax basis.
Section 110202 would let workers who get the new type of cash-for-coverage HRA, the CHOICE arrangement, through a cafeteria plan keep the HRA cash spent on individual major medical coverage out of their taxable income.
3. Section 110203: "Employer credit for CHOICE arrangement."
This provision provides a tax credit of $100 per month per employee enrolled in a CHOICE plan when the plan provides major medical coverage that provides affordable minimum essential coverage that provides at least bronze-level benefits, or benefits that cover about 60 percent of the value of the official "essential health benefit" package.4. Section 110204: "Individuals entitled to part A of Medicare by reason of age allowed to contribute to health savings accounts."
Today, people who turn 65 and are eligible for Medicare Part A hospitalization coverage cannot continue to contribute to HSAs.
This provision would let people who are eligible for Medicare continue to contribute to HSAs.
Advertisement
5. Section 110205: "Treatment of direct primary care service arrangements."
This provision would let the owner of a health savings account pay the dues for a "direct primary care practice," or subscription-based primary care program.
The limit would be $150 per month for an individual and $300 per month for a family.
6. Section 110206: "Allowance of bronze and catastrophic plans in connection with health savings accounts."
Workers with health savings accounts are supposed to have high-deductible health coverage, to give them "skin in the game" and make them careful healthcare shoppers.
But the eligible high-deductible coverage is supposed to have a reasonably low cap on maximum annual out-of-pocket spending.
The annual out-of-pocket spending caps on ordinary bronze-level and catastrophic major medical insurance policies are now high enough that people with those levels of coverage cannot contribute to HSAs.
This provision would make ordinary bronze-level and catastrophic-level health insurance policies compatible with HSAs.
7. Section 110207: "On-site employee clinics."
Today, regulators say having access to an employer's health clinic violates the principle that an HSA holder should have a high-deductible health plan.This provision would let workers with access to on-site clinics contribute to HSAs.
9. Section 110208: "Certain amounts paid for physical activity, fitness, and exercise treated as amounts paid for medical care."
This provision would let HSA owners use the cash to pay the dues for fitness facilities. The limit would be $500 for an individual and $1,000 for a family.9. Section 110209: "Allow both spouses to make catch-up contributions to the same health savings account."
This provision would let a couple that's 55 or older add up to $1,000 in extra catch-up contributions per year to an HSA.Advertisement
10. Section 110210: "FSA and HRA terminations or conversions to fund HSAs."
This provision would let a worker with a flexible spending arrangement or health reimbursement arrangement that's terminating roll some unused value into a health savings account. The amount shifted would be limited to the annual FSA contribution limit. This year, that's $3,300.11. Section 110211: "Special rule for certain medical expenses incurred before establishment of health savings account."
This powerful provision would let an individual use cash contributed to an HSA use distributions to pay for health care expenses incurred up to 60 days before the HSA was formed.12. Section 110212: "Contributions permitted if spouse has health flexible spending arrangement."
This would let one spouse contribute to a flexible spending arrangement and the other contribute to a health savings account.Today, the spouse of someone with an FSA cannot normally contribute to an HSA.
13. Section 110213: "Increase in health savings account contribution limitation for certain individuals."
This section could increase the maximum HSA contribution, using an income-based formula.For individuals making $75,000 per year, for example, the limit would increase to $8,600, from $4,300 today.
For couples making $150,000 per year, the limit would increase to $17,100, from $8,550.
14. Section 110214: "Regulations."
This provision authorizes the Treasury secretary and the Health and Human Services secretary to develop the rules and guidance needed to implement the new health account laws.Advertisement
Credit: alphaspirit.it/Shutterstock
Members of the House voted 215-214 to pass the One Big Beautiful Act tax and budget package Thursday, and 14 provisions that could affect health savings accounts and health reimbursement arrangements are in there.
Related: House Ways & Means budget bill includes major ICHRA, HSA, paid leave and student loan provisions
The sections getting most of the attention would do things like keep the estate tax exemption high, cut Medicaid funding and increase the federal excise tax on large colleges' endowment earnings to 21%, from 1.4% today.
House Republican leaders will now have to negotiate with Republican Senate leaders to come up with a something that can get through both the House and the Senate and be signed into law by President Donald Trump.
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The FSA and HSA provisions, which are tucked away in the Investing in Health of American Families and Workers section, have received little attention as they've moved through House committees.
For a closer look at each of the 14 provisions, see the gallery accompanying this article.
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Allison Bell
Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.
