Senator Orrin G. Hatch (R-UT) and Representative Erik Paulsen (R-MN) introduced legislation intended to simplify and expand health savings accounts (HSAs) and flexible spending accounts (FSAs).  The bill would make a number of changes to HSAs, including:

  • Allowing a spouse who is the an HSA holder to make double catch-up contributions to account for a spouse who is also eligible to make catch-up contributions
  • Allowing Medicare beneficiaries enrolled only in Part A to continue to contribute to their HSAs after turning 65 if they are otherwise eligible to contribute to an HSA
  • Treating payments for over-the-counter drugs as qualified medical expenses (under current law, in general, only payments for prescribed drugs and insulin are treated as qualified medical expenses)
  • Making it easier for employers to roll-over funds from employees’ FSAs or health reimbursement agreements to their HSAs in a future year
  • Treating HSAs in the same manner as individual retirement accounts for the purpose of bankruptcy law

The bill would also make certain changes to provisions enacted by the Affordable Care Act, including:

  • Treating employer-sponsored HSA eligible health plans as providing minimum value for certain purposes under the Affordable Care Act, regardless of the proportion of the plan’s share of the total allowed costs of benefits provided under the plan
  • Excluding certain health arrangements, including HSAs, from the Cadillac tax under the Affordable Care Act

Finally, the bill would allow individual medical care deductions for certain exercise equipment, physical fitness programs, nutritional and dietary supplements, and periodic fees paid for specific medical services or the right to receive medical services on an as-needed basis.

A section-by-section summary of the bill can be found here