H.R. 6306 would amend the Internal Revenue Code to increase the maximum contribution limit to Health Savings Accounts (HSAs), allow both spouses of a married couple to make catch-up contributions to the same HSA, and expand the definition of qualified medical expenses to include expenses incurred during a period of up to 60 days between the start of coverage under a high deductible health plan and when an HSA is established.
Individuals are generally eligible for certain tax-advantaged saving through HSAs if they are covered by a high deductible health plan but not by other health plans. Under current law, the basic contribution limit in 2018 to an HSA is $3,450 in the case of self-only coverage and $6,900 in the case of family coverage. H.R. 6306 would raise the limit to the sum of the annual deductible and out-of-pocket expenses permitted under a high deductible health plan. Thus, for 2018, the basic limit is $6,650 in the case of self-only coverage and $13,300 in the case of family coverage. As under present law, basic contribution limits are increased by $1,000 (“catch-up contributions”) for an eligible individual who has attained age 55 by the end of the taxable year.
Under current law, if both spouses are at least age 55 and eligible to make catch-up contributions, each must make the catch-up contribution to his or her own HSA. The bill would allow spouses to allocate combined catch-up contribution amounts into a single spouse’s HSA.
The bill would also modify rules concerning the start-date of qualified medical expenses for HSAs. Under current law, an HSA generally must be established before medical expenses can qualify for distributions. Under the bill, if an HSA is established during the 60-day period beginning on the date that an individual’s coverage under a high deductible health plan begins, then the HSA is treated as having been established on the date coverage under the high deductible health plan begins for determining whether an amount paid is used for a qualified medical expense.
The staff of the Joint Committee on Taxation (JCT) estimates that enacting H.R. 6306 would reduce revenues by $15.3 billion over the 2019-2028 period. The change in revenues includes a reduction of $3.6 billion over the 2019-2028 period that would result from changes in off-budget revenues (from Social Security payroll taxes). CBO estimates that enacting H.R. 6199 would not affect direct spending.
JCT has determined that the bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.