Expanding HSAs

The current version of the House tax bill contains significant changes that would impact HSA participants. Notably, the bill as drafted would allow seniors to continue contributing to an HSA even after being enrolled in Medicare Part A if they are enrolled in a high-deductible health plan (HDHP). Under current law, contributions are prohibited after Medicare enrollment. The draft would also include the ability to use HSA funds to pay for gym memberships and other similar physical exercise costs (capped at $500 per year). The legislation would also allow two spouses to make each of their $1,000 catch-up contributions (available starting at age 55) to the same HSA. The changes would expand HSA eligibility so that an individual would be HSA-eligible if they are enrolled in any Bronze or Catastrophic plan on the health insurance marketplace and would allow HSA funds to be used to pay for direct primary care membership fees.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about the changes to HSAs contained in the House-passed draft tax legislation.

Below is a summary of the debate that ensued between the two professors.