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The bill: H.R. 6134
Official Joint Committee Description
We would say about half the people in the
industry who support HSAs preferred other
changes, not the ones approved this week,
although nobody wants to actually criticize the
move...
Insurers and employers want to be able to make
HRA and FSA rollovers into HSAs -- all year
long, and determined by the free market.
Instead, the provision which passed is intended
to simply eliminate HRAs and FSAs and replace
them with HSAs...
There are issues here between banks and
brokerages. We don't believe the entire
brokerage community was consulted, since the
fees earned on IRAs and those on HSAs will be
very different. |
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Final
HSA Bill Report Adds Some Positives
A just-released
final committee report on the Cantor bill makes two major
changes in the approved bill that make it more attractive.
The final mods in the still-unpublished print were the
result of strong industry lobbying by employers to make it
more palatable, such as throwing out the expensive Bush HSA
contribution scheme. The main feature of the original Cantor
bill – HRA/FSA rollovers into HSAs – is still missing, but
other provisions would make HSAs more attractive.
Here are the
changes just detailed in the final committee print:
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HSA contributions.
The final report includes almost the exact provision of the
original Cantor bill ending the limitation on HSA deductions
to the amount of the deductible. Under the final bill HSA
owners will be able to have a minimum deductible, but still
make a larger contribution of $2,250 for individuals and
$4,500 for families. A White House proposal to increase the
ceiling to $10,500 for families (the limit on out-of-pocket
expenses) was rejected in final markup.
This provision
could greatly stimulate HSA enrollment by allowing
individuals to have deductibles as low as $1,050 (for 2006),
yet make HSA contributions of $2,250. That would benefit all
income levels and turn HSAs into a more mainstream product.
--
FSA Grace Period.
The final bill allows HSA contributions to be made for
people who set up an HSA but still having an FSA during
their 90-day FSA grace period. Under existing rules a
person with an FSA could not make HSA contributions in the
year after they terminated their FSA if there were a grace
period.
The report also
includes official estimates of the tax impact that indicate
how the bill will affect HSA bank deposits (our estimate is
coming in this week’s newsletter). Another interesting item
is the “dissenting views” letter. Democrats got a promise
from Treasury to make public the actual tax data on HSA
depositors in terms of income and amount of deposit. |
