Legal Briefing: The Health Savings for Seniors Act

White House Announces New HRA Plans in 2020

On July 18, 2019, Reps. Ami Bera (D-CA) and Jason Smith (R-MO) introduced H.R. 3796, the Health Savings for Seniors Act. This bipartisan bill would allow individuals enrolled in Medicare to maintain eligibility for health savings account (HSA) contributions. The proposed bill is designed to increase access to care and alleviate the rising out-of-pocket expenses for the 57 million older Americans currently enrolled in Medicare.

A summary of the proposed bill is as follows:

  • Anyone enrolled in Medicare, either traditional fee-for-service or Medicare Advantage plans (including Medicare Advantage MSA), will be HSA eligible—as long as they are otherwise eligible to contribute to an HSA.

    • An individual could open an HSA and fund it to the HSA individual maximum.
    • An individual that already has an HSA would be able to continue contributing to their account after they leave employment and enroll in Medicare.
  • The bill allows working seniors to enroll in Medicare and still be HSA eligible on their employer-sponsored, HSA-qualified health plan coverage.

  • This bill does not change any rules for Medicare.

  • The following HSA rules will apply:

    • Individuals will not be able to use HSA funds to pay for Medicare premiums.
    • The waiver of the penalty for non-qualified withdrawals from the HSA will be eliminated for those 65 and over, just like it is now for those under 65.
  • This bill changes the term High Deductible Health Plan (HDHP) to HSA-Qualified Health Plan to be inclusive of the newly eligible Medicare plans.

The Health Savings for Seniors Act follows recent guidance from the Department of Treasury, IRS Notice 2019-45, which names additional medicines and services that can be treated as preventive care and which may be included in HDHPs before the deductible for those with chronic conditions.

By |2019-07-23T11:44:28-04:00July 23rd, 2019|Brokers, Employer Posts, HSAs, Legislation, News|
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.