The House Ways and Means Committee should be meeting today, Thursday, 31 May, to mark up an assortment of bills that will (one can only hope) sort out some issues we have been having with our health savings accounts (HSAs) and flexible spending accounts (FSAs). A ‘mark up’ is simply the process by which congressional committees and subcommittees discuss, debate, amend and rewrite proposed legislation: during the course of the meetings they actually ‘mark up’ the bills in question with revisions and changes.
The committee has already sent along some ten measures to the Joint Committee on Taxation for review. One of these bills, for example, HR 5842, the Restoring Access to Medication Act bill, would restore the ability of HSA and FSA account holders to pay with those funds for over-the-counter drugs and medications not prescribed by a doctor. During previous sessions, members of Congress had taken away that ability, in a move to reduce the tax revenue lost to FSA and HSA programs and use that anticipated extra tax revenue to fund other programs.
Now the plan is to amend tax law and encourage (again) participation in using these special savings accounts to pay for medical expenses. There is also a move to repeal the med-tech levy, a 2.3% tax on US revenues from medical device sales, due to go into effect in January, 2013. This tax was expected to raise as much as $30 billion over the next ten years and thereby help pay for healthcare reform.
Other bills under consideration might just make it easier for FSA holders to roll over — or get back — any unused balances in their accounts at the end of the year.
Left hand/right hand, giving here/taking there: round and round and round it goes!
An FSA, or flexible spending account, is a plan offered by an employer to an employee that allows a fixed amount of pre-tax wages to be set aside for qualified expenses. These qualified expenses may include child care or uncovered medical expenses. The amount to be set aside is determined in advance; at present, an employee loses any unused dollars still in the account at year-end.
An HSA, or health savings account, is a savings account set up to be used for medical expenses — and nothing else. The funds directed to the account are pretax dollars, which reduces the account holder’s taxable income, and interest is offered on the balance. The HSA can be used to pay for insurance deductions, dental expenses, optical expenses, some over-the-counter medications and so on. Often used in conjunction with high-deductible health insurance plans, any funds remaining in the account at year-end are not forfeited but remain in the account for later use.
Of course we’ll keep you posted!