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Chairman Smith Opening Statement – Markup of the Bipartisan HSA Improvement Act and the HSA Modernization Act

September 28, 2023

As prepared for delivery.

“The Ways and Means Committee has been focused on lowering the cost of health care and giving working families more health care options.

“During a hearing back in May, Committee members heard testimony on the benefits of Health Savings Accounts, or HSAs, for families. HSAs allow and encourage individuals and families to save money to cover current and future health care expenses like copayments for medical services as well as over-the-counter and prescription drugs.

“We also learned during that hearing that more should be done to increase the number of folks who are eligible to set up these tax-advantaged accounts and remove unnecessary regulatory red tape to make them even more useful. This effort is in line with the Committee’s focus on helping working families – in fact, 78 percent of HSAs are used by taxpayers making less than $100,000.

“We have before us two pieces of legislation to improve health savings accounts. Today’s legislation pursues two avenues of reform – one to expand the eligibility of those wishing to establish and contribute to an HSA and the other to address outdated barriers and red tape harming participation.

“Currently, veterans receiving care through the VA and working seniors on Medicare are either ineligible or face roadblocks in contributing to these accounts that would help them have more control over their health care. The same is true for Native Americans receiving care through the Indian Health Services and those covered by certain ACA plans. At the same time, various types of care – including direct primary care services, care delivered at a person’s place of work, and services rendered just before establishing an HSA – are ineligible to be paid for using health savings account funds. We also know more can be done for patients who need access to mental health and home care services while still contributing to HSAs.

“In addition to expanding eligibility, we should align annual HSA contribution limits to equal what patients may owe in total out-of-pocket expenses and their deductible. These limits have not been updated in 17 years while medical costs have gone up 75 percent during that same time period. The point of these savings is to help folks afford the side of health care costs they must cover, so there’s no reason to cap that below what they may be required to owe.

“Under current law, individuals nearing retirement can increase their HSA contributions in order to “catch-up” and better save for health expenses. However, for spouses who want to combine forces on saving for future health care expenses, they must open up and contribute “catch-up” funds into separate HSA accounts. It’s needless, and we should end that requirement so that they can easily contribute into the same account.

“Along the same lines, if your spouse has a flexible spending arrangement – a similar savings vehicle for health care expenses – it should not bar you from establishing an HSA. Again, there’s no reason to leave these types of marriage penalties in place. The bills before us today would strike that prohibition against establishing an HSA while at the same time allowing someone who wants to convert their flexible spending accounts into a health savings account, to do so.

“All of these efforts aim to make these savings opportunities more available, more flexible, and more reflective of the reality individuals face in covering their health care expenses – all of which will help increase patient access to care.

“HSAs have a meaningful tax advantage, and I’m proud we’re improving these accounts so families can take the most advantage of this investment in their health.

“I appreciate the bipartisan work that has been done by members of this Committee to bring many of these solutions to the table today, and I look forward to us delivering for working families once again.”