House Panel OKs Legislation to Raise HSA Contribution Limits

An HSA brochure with a stethoscope

Under current law, “active employees are only allowed to contribute to an HSA if they are not enrolled in Medicare,” ABC said. The group said it supports legislation “that would allow employees to continue to contribute to their HSAs until they retire, even though they are automatically enrolled in Medicare Part A at age 65.”

The bill would also allow HSA funds to cover health care services that occurred up to 60 days prior to the establishment of the account and allow both spouses to make catch-up contributions to the same HSA.

The Bipartisan HSA Improvement Act, introduced by Rep. Lloyd Smucker, R-Pa., would:

Allow an individual to maintain an HSA even if their spouse is enrolled in a flexible spending arrangement (FSA).
Ensure employees, at the employer’s discretion, may convert their FSA and health reimbursement arrangement (HRA) balances into an HSA contribution upon enrolling in a high-deductible health plan with an HSA. The conversion amount is capped at the annual FSA contribution limit for an individual ($3,050 in 2023) and double that for family coverage.
Clarify that HSA funds can be used for direct primary care, an arrangement in which patients pay monthly fees directly to a care provider.

“Many of the solutions included in these bills reflect basic common sense like ending the marriage penalty that currently bars married couples from combining their HSA contributions into a single account, ensuring eligibility of direct primary care arrangements and worksite clinics, and allowing folks to save an amount that will actually cover what they might owe in out-of-pocket expenses,” Ways and Means Committee Chairman Jason Smith, R-Mo., said in a statement.

See also  Don't Wait! Get Ahead of SEC Scrutiny With Mock Examinations

With 78% of health savings accounts owned by taxpayers making less than $100,000, Smith said, “HSAs are clearly a tool middle- and low-income families find useful.”