Bipartisan H.R. 1270 Aims to Improve Utility of and Contributions to HSAs
Important update on legislation set to help healthcare consumers, as well as taxpayers to retain the most value from healthcare reform laws. The three-title bill, H.R. 1270/S. 709, which passed the House of Representatives on July 6, 2016, was designed to improve access to medication for Americans with certain accounts, increase HSA contributions, and increase the reconciliation limits for advance subsidies. Learn more below.
On July 6, 2016, the House of Representatives passed H.R. 1270, the Restoring Access to Medication Act, which would overturn a provision of the Affordable Care Act that prohibited flexible spending arrangements (FSAs), health reimbursement arrangements (HRAs) and health savings accounts from reimbursing the expenses for over-the-counter drugs and medicines.
The bill would provide that reimbursements of over-the-counter drugs and medicines would be permitted after December 31, 2016.
Restoring Access to Medication Act of 2016
The main purpose of the H.R. 1270/S. 709 is to increase access to needed medications by removing a barrier currently in place that prevents consumers from using their Health Savings Accounts (HSAs), Archer MSAs, and Employer-Contributed Accounts including flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs) to purchase over the counter (OTC) medication.
Restoring Access to Medication Act aims to strike the following statement from 26 U.S. Code § 220 dealing with Archer MSAs and 26 U.S. Code § 223 dealing with Health Savings Accounts:
“Such term shall include an amount paid for medicine or a drug only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.” (26 USC 220 (d)(2)(A), 26 USC 223 (d)(2)(A))
And 26 U.S. Code § 106(f), dealing with flexible spending arrangements and health reimbursement arrangements:
“For purposes of this section and section 105, reimbursement for expenses incurred for a medicine or a drug shall be treated as a reimbursement for medical expenses only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.”
In short, the bill seeks to improve access to non-prescription drugs using pre-tax income contributed to health savings accounts, Archer MSAs, and Flexible Spending Accounts.
The bill also includes the following titles, included in the bill by the House Rules Committee: Health Care Security Act of 2016 and Protecting Taxpayers by Recovering Improper Obamacare Subsidy Overpayments Act.
Health Care Security Act (Originally H.R. 5445)
The Health Care Security Act, Title II of H.R. 1270, was designed to increase the health savings account contribution limit to an amount equal to the sum of an eligible health insurance policy’s deductible and the policy’s out-of-pocket spending maximum. That could increase the maximum deduction to more than $7,800 for an individual and more than $15,000 for a family.
Learn more about H.R. 5445 as part of H.R. 1270 here.
Protecting Taxpayers by Recovering Improper Obamacare Subsidy Overpayments Act (H.R. 4723)
H.R. 4723, rolled into H.R. 1270, is a bill that would require all public exchange plan advance premium tax credit (APTC) users to pay any extra APTC subsidy money they get back to the government.
These “clawback” provisions occur if a consumer underestimates income or misstates status when he or she applies for a plan on the exchange. These estimates are used by the Internal Revenue Service (IRS) and the U.S. Department of Health and Human Services (HHS) to determine how much APTC money the government should send plans for each enrollee. If the consumer makes more than stated, he or she will have to pay back the subsidy received.
Currently, Federal law requires an APTC recipient who ends up making more than 400% or more of the Federal Poverty Level to return all excess APTC money received. Additionally, caps of $700 (single), $1,500 (all others) and $1,250 (single) and $2,500 (all others) for those making 200-299% and 300-399%, respectively.
In short, the purpose of the bill is to remove the capped maximums in order to treat each applicant fairly, minimize risk of dishonesty in applications, and fairly collect any money incorrectly distributed.
Jenkins, the sponsor of this bill, was quoted, “It is neither good governance nor fiscally sane to treat folks differently for the same issue.”
Co-Sponsors and Roll Call Numbers
While the bill was sponsored by Kansas Republican Lynn Jenkins, and co-sponsored by 35 Republican Representatives, this bill did garner interest from the other side of the table. H.R. 1270 had four Democrat co-sponsors: Moderates Ron Kind (D-WI3), Patrick Murphy (D-FL18), and Kyrsten Sinema (D-AZ9), as well as Peter DeFazio (D-OR4). Additionally, the bill picked up another six Democrats in voting, pushing the Yeas to 243 and Nays to 164, with 26 not voting.
The companion bill, S. 709, was sponsored by Pat Roberts (R-KS), with 14 Republican co-sponsors, one Democrat co-sponsor and one Democratic-caucusing Independent co-sponsor. Currently assigned to the Senate Finance Committee, the bill is currently not on the Senate calendar, and Senate staff expects a vote during the lame-duck session at the end of the year.
Conclusion: Bill Set to Save Healthcare Consumers, Retirees, and Taxpayers
The bill, initially set to include only the provision allowing OTC medications to be purchased with pre-tax plans, has been amended to include two other important bills designed to help taxpayers to save money, current employees and soon-to-be-retirees to increase pre-tax contributions to their health savings accounts (proven to be an essential factor in saving for retirement), and to promote honesty in marketplace applications.
Our very own Chris Byrd took a deeper look at H.R.1270/S 709 and HR 4469 /S 2499, as well as a large number of important bills currently under discussion in Congress, in a recent Healthcare Trends Institute webcast: The Legislative and Regulatory Outlook for Healthcare Benefits Professionals, available for download.