House Proposal Would Add HSA Restrictions

Representative Lloyd Doggett (D-TX) has introduced H.R. 6183, the Health Savings Account (HSA) Consumer Protection Act. According to a press release, the bill would do the following.

• Remove the exception that permits HSA use for non-health care services without penalty at age 65. Currently, withdrawals can be used for any purpose, with no penalty, including day-to-day expenses, a vacation, a boat, or home renovations.
• Place income limitations around the payroll tax exemption for HSA contributions, so that HSAs cannot be used as an income tax shelter for wealthy individuals.
• Limit the window for reimbursement to two years from when a qualified medical expense was paid.
• Require individuals to substantiate that their distributions from HSAs are for qualified medical expenses.
• Prevent waste, fraud, and abuse by strengthening guardrails protecting against the misuse of HSAs for non-qualified medical expenses.
• Ensure that institutions offering HSAs do not charge excessive fees and meet basic transparency requirements, including those related to the fees charged for opening and maintaining an HSA.