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Ways and Means Committee Approves Legislation to Help Americans Save For and Better Afford Health Care Expenses

September 28, 2023

WASHINGTON, D.C. – Americans would have more opportunities to save for and afford health care costs under legislation approved today by the House Ways and Means Committee that makes an existing health care financing tool, the health savings account (HSA), more accessible and useful for patients and families. The Bipartisan HSA Improvement Act of 2023 (H.R. 5688) and the HSA Modernization Act of 2023 (H.R. 5687) expand the eligibility of those wishing to establish and contribute to an HSA while addressing outdated bureaucratic barriers and red tape that have stood in the way of individuals realizing the full potential of these tax-advantaged accounts.

Ways and Means Committee Chairman Jason Smith (MO-08) issued the following statement after the Committee approved the Bipartisan HSA Improvement Act of 2023 and the HSA Modernization Act of 2023:

“Our committee has been focused on helping working families and that includes making health care more affordable and accessible. With 78 percent of health savings accounts owned by taxpayers making less than $100,000, HSAs are clearly a tool middle- and low-income families find useful. However, we can help those same families better utilize HSAs, save more to cover more of their health care costs, and make more of their fellow citizens – like working seniors, veterans, and Native Americans – eligible to partake in the tax savings and flexible care options provided by HSAs. 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-pocket-expenses. I look forward to continuing to work with colleagues on a bipartisan basis to deliver for working families.”

Background on the Bipartisan HSA Improvement Act (H.R 5688):

  • Allows individuals who utilize key health services such as direct primary care arrangements and worksite health clinics to use their own resources to contribute to health savings account funds.
  • Eliminates a prohibition against an individual establishing an HSA if their spouse has an existing flexible spending arrangement – a similar savings vehicle for health care expenses.
  • Allows individuals to convert their own flexible spending or health reimbursement arrangement dollars into a health savings account.

Background on the HSA Modernization Act (H.R. 5687):

  • Expands eligibility for individuals to participate in HSAs who are veterans receiving care through the Veterans Administration, working seniors on Medicare, Native Americans, and those enrolled in certain health benefit exchange plans.
  • Increases the contribution limits for health savings accounts to better align with what an individual might owe in total out-of-pocket expenses and deductibles.
  • Allows the use of an individual’s health savings account funds to cover health care services that occurred up to 60 days prior to the establishment of an HSA.
  • Allows spouses to contribute “catch-up” funds into the same health savings account rather than having to establish separate accounts for such contributions.
  • Increases access to mental health and home health care services for those still contributing to an HSA.

Background on Health Savings Accounts:

  • Patient-owned, portable, tax-advantaged accounts used to save money to cover qualified medical expenses (QMEs) such as copayments for medical services, over-the-counter and prescription drugs, or hearing aids.
  • Contributions are deducted from payroll and income taxes. Investment earnings and distributions that cover QMEs are not taxed.