Health Care News: IRS Sets HSA Limits for 2018, House Passes AHCA
It’s hard to keep up with all the health care legislation news lately. That’s why we’re providing regular summaries of the latest news, reflecting the current state of health care in the United States or how it may be changing in the not-too-distant future. Here’s a recap of some of the latest stories:
IRS Announces HSA Limits for 2018
The Internal Revenue Service (IRS) released the 2018 contribution limits for HSAs and the maximum deductibles and out-of-pocket expenses for HSA-qualifying High Deductible Health Plans (HDHPs).
The 2018 HSA limits are as follows:
Maximum HSA Contribution Level
$3,450 for individual coverage
$6,900 for family coverage
Minimum Deductible for HDHP
$1,350 for individual coverage
$2,700 for family coverage
Maximum Out-of-Pocket Expenses for HDHP
$6,650 for individual coverage
$13,300 for family coverage
House of Representatives Passes American Health Care Act
The House of Representatives passed the American Health Care Act (AHCA) on Thursday, May 4 by a vote of 217 to 213. The party-line vote was the result of last-minute negotiations between the House Freedom Caucus and the Tuesday Group.
The resulting amendments retained the whole text of the AHCA proposed by House Speaker Paul Ryan (R-WI) but added text giving states the opportunity to waive out of essential health benefit requirements and community rating requirements regarding pre-existing conditions and age, and adding money to fund high-risk insurance pools.
The AHCA, as passed, includes several enhancements to HSAs, including:
Maximum HSA contribution limit increased to the maximum out-of-pocket amount;
Catch-up contributions to the same HSA allowed if both spouses are eligible for catch-up contributions and either spouse has family coverage;
Backdate of establishment of HSA to date an individual’s coverage under HDHP begins allowed if the HSA is created within 60-days of coverage beginning;
Reduced penalty for non-qualified distribution from 20% to 10%; and
Excess insurance from proposed premium tax credit allowed to be deposited directly into HSA.
The AHCA also makes over-the-counter medications “qualified medical expenses” for HSAs, FSAs, and HRAs. Additionally, the maximum contribution limit for FSAs is repealed by the AHCA. And the Cadillac Tax is delayed by the bill until 2025.
The AHCA now moves to the Senate, where it faces an up-hill battle to passage in its current form.
Senate to Consider AHCA
Following passage by the House, the AHCA has been delivered to the Senate for consideration. The bill has been met with skepticism by the Senate. Senator Lindsay Graham (R-SC) said, “any bill that has been posted less than 24 hours, going to be debated three or four hours, not scored? Needs to be viewed with suspicion.”
This skepticism has led to Republican Senators planning to draft and vote on their own repeal and replace legislation. Senator Lamar Alexander (R-TN) said that “we’re writing a Senate bill and not passing the House bill… we’ll take whatever good ideas we find there that meet our goals.” Senator Bob Corker (R-TN) indicated that he had not paid attention to what the House was passing.
There are additional procedural hurdles in the Senate, as well. Senate Majority Leader Mitch McConnell (R-KY) says that consideration of the bill will not begin in earnest until it has won the approval of the Senate Parliamentarian and received a score from the Congressional Budget Office (CBO).
The Parliamentarian will need to confirm that the AHCA qualifies as a reconciliation bill and can avoid an almost certain filibuster by Senate Democrats. The CBO score would analyze the effect of recent amendments on premium prices, coverage rates, and budget implications.
There is much less room for defection by Republican Senators than in the House. Whereas the House could lose over twenty Republican votes, the Senate can lose just two. Republican Senators, who are more generally more moderate than their House counterparts, will likely need to redraft large portions of the AHCA to gain broad support amongst the party.
It is unlikely that those changes will include removal of improvements to HSAs as those are widely popular within the party.
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Disclaimer: ConnectYourCare does not provide tax or legal advice. This information is not intended and should not be taken as tax or legal advice. Any tax or legal information in this notice is merely a summary of ConnectYourCare’s understanding and interpretation of some of the current tax regulations and is not exhaustive. You should consult your tax advisor or legal counsel for advice and information concerning your particular situation before making any decisions.