A bill introduced Thursday aims to expand Health Savings Accounts (HSAs) and Flexible Savings Accounts (FSAs), broadening what consumers can purchase using these tax-advantaged medical savings plans.
The Health Savings Act of 2016, introduced by Senate Finance Committee Chairman [crscore]Orrin Hatch[/crscore] and Rep. [crscore]Erik Paulsen[/crscore] of Minnesota, would amend current law to allow for the purchase of health insurance plans and over-the-counter medication using HSAs. Certain exercise equipment, fitness programs and dietary supplements would also be put under the umbrella of medical care.
“Health Savings and Flexible Spending Accounts give hard-working Americans more choice and control when it comes to their health care decisions” Paulsen said. “Expanding and simplifying these plans will provide families with even greater flexibility to save and pay for medical expenses.”
High deductible health plans, which have become increasingly popular in recent years, would be renamed “HSA-eligible health plans” in the Internal Revenue Code.
With health spending projected to go up by nearly 6 percent annually for the next eight years, the bill would provide consumers with more ways to save for their medical needs, according to Hatch and Paulsen.
“This legislation provides those much-needed updates and simplifies these plans helping American families, workers, and retirees build tax-free savings for future medical costs,” Hatch said in a joint statement with Paulsen.
The American Banking Association, a Washington-based trade association, came out in support of the measure Friday, applauding the changes it would make to an Obamacare provision poised to take effect in 2018 that would place a tax on premium health plans.
“We’re pleased that the bill would exempt employee contributions made to HSAs from the Affordable Care Act’s Excise or Cadillac tax and streamlines administration of HSAs for all Americans,” the group said in a statement.
Hatch introduced similar measures in 2008 and 2013.
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