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S3362119th CongressWALLET

Health Marketplace and Savings Accounts for All Act

Sponsored By: Senator Paul, Rand [R-KY]

Introduced

Summary

This bill would expand Health Savings Accounts (HSAs) by changing who can contribute, how much they can put in, what counts as qualified spending, and how accounts are treated in bankruptcy. It would also create statutory "health marketplace pools" that can offer group plans, including drug-only coverage, and provide ERISA safe harbors to participating members.

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  • Families: Families could use HSAs for more everyday wellness costs like vitamins, dietary supplements, gym memberships, and wearable fitness trackers. The bill also allows certain medical expenses incurred before an HSA is opened to qualify and permits rollovers or transfers to dependents and specified family members.
  • Employers and workers: Local groups or employers could join or form health marketplace pools that are treated as employers for offering group plans. Pools may offer self-insured or issuer-contracted plans, set premiums and participation rules within non-discrimination limits, and get limited fiduciary safe harbors under ERISA.
  • HSA account holders and seniors: Contribution limits would align with existing Internal Revenue Code catch-up rules and add age-based catch-up contributions for people age 50 and older. HSAs would gain bankruptcy protection similar to individual retirement accounts.

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Bill Overview

Analyzed Economic Effects

6 provisions identified: 5 benefits, 0 costs, 1 mixed.

Bigger HSA tax limits and deduction

If enacted, you would be able to deduct cash contributions you make to your HSA for the taxable year. The bill would change how HSA contribution limits are set by tying them to the amount used under another tax rule and would add an extra catch-up amount for people who are age 50 or older. These changes would apply for taxable years beginning after the date of enactment. The bill would also remove a technical phrase tied to high-deductible plan coverage that affects certain tax calculations.

New pooled health marketplaces allowed

If enacted, the bill would create a new legal category called a health marketplace pool that can act like an employer to offer group health plans or group insurance. Pools would have to admit members without health-status limits and make group coverage available to members and employees of member employers. Pools could set policy- or product-specific rates and could offer narrow designs such as drug-only plans and over-the-counter drug coverage. The bill would also add ERISA changes to limit fiduciary exposure for pool members.

New employer HSA contribution rules

If enacted, employers would have to make comparable HSA contributions available to comparable participating employees each year. Comparable can be the same dollar amount or the same percent of the plan deductible. Part-year and part-time employees would be handled proportionally and coverage categories would be self-only or family. This would help employee HSA funding equity but would raise employer costs and administrative duties.

More things you can pay with an HSA

If enacted, you would be able to use HSA money for direct primary care fees and for new "qualified wellness expenses" like vitamins, dietary supplements, gym memberships, and wearable fitness trackers. The bill would treat children under age 27 as covered persons for HSA purposes. Some medical expenses paid just before you open an HSA could also be reimbursed if they fall in the allowed timing window. These changes would lower some out-of-pocket costs for eligible wellness and primary care spending.

Family rollovers and HSA inheritance

If enacted, for taxable years beginning after the date of enactment, HSAs could roll over to or be treated as belonging to a surviving spouse, child, parent, or grandparent. If a child acquires the HSA and another taxpayer claimed a section 151 deduction for that child for the year, the account would be treated as the child's HSA. This would help preserve tax-favored status and simplify transfers after an account holder dies.

HSA error fixes without penalties

If enacted, on the date of enactment the bill would allow corrective HSA distributions to fix administrative, clerical, or payroll contribution errors. You would have to receive the corrective distribution by the tax filing deadline (including extensions) and include any net income from the contribution in your gross income for the year you receive it. This would avoid adverse tax treatment if the rules are followed.

Sponsors & CoSponsors

Sponsor

Paul, Rand [R-KY]

KY • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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