3 Things to Know About HSA Expansion

President Donald Trump revealed a preference for HSA expansion in ACA replacement. Bills introduced in January and February offer proposals.

President Donald Trump in a Feb. 28, 2017, speech to a joint session of Congress revealed where he stands on how he thinks the Affordable Care Act (ACA) should be replaced, at least in terms of funding healthcare, according to Reuters.

We should help Americans purchase their own coverage, through the use of tax credits and expanded Health Savings Accounts," Trump said.

Health savings accounts (HSAs) are tax-exempt trust or custodial accounts that pay or reimburses medical expenses. Additionally, when employers facilitate HSA contributions, there is an additional payroll tax break.

Last month, the Health Savings Account Expansion Act was reintroduced by Representation Dave Brat of Virginia with Senator Jeff Flake of Arizona.

According to Brat's summary of the legislation -- also known as Flake-Brat -- expanded HSAs under the proposed structure would:

  1. Nearly triple existing HSA contribution limits to $9,000 for individuals and $18,000 for families
  2. Allow tax-free purchase of health insurance, over-the-counter medications and direct primary care
  3. Eliminate the ACA mandate that HSA holders purchase a government-designed, high-deductible health plan

“If we want to lower healthcare costs and improve consumer choice, the key is not more government intervention, but allowing individuals the freedom to take back control of their own healthcare and incentivizing prudent decision making,” said Brat in a prepared statement about the bill's reintroduction.

According to Forbes, when the bill was originally introduced in 2016, Flake-Brat's HSA expansion bill represents a $9 trillion tax cut. It does not address the varying tax breaks for employees and workers.

Republicans disagree on how to fund an ACA replacement, however. Some of them have called proposals 'Obamacare Light.'

Senator Rand Paul of Kentucky and Representative Mark Sanford of South Carolina filed their own HSA expansion bill, but it avoids what they describe as entitlements the government cannot afford.

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