February 19, 2016


GOP Bill Could Make Health Insurance And Over-The-Counter Drugs More Affordable (Juliegrace Brufke, 2/05/16, Daily Caller)

A bill introduced Thursday aims to expand Health Savings Accounts (HSAs) and Flexible Savings Accounts (FSAs), broadening what consumers can purchase using these tax-advantaged medical savings plans.

The Health Savings Act of 2016, introduced by Senate Finance Committee Chairman Orrin Hatch and Rep. Erik Paulsen of Minnesota, would amend current law to allow for the purchase of health insurance plans and over-the-counter medication using HSAs. Certain exercise equipment, fitness programs and dietary supplements would also be put under the umbrella of medical care.

Thanks, W!

Health savings accounts can keep retirement plans in shape (Kelli B. Grant, 5 Feb 2016, CNBC.com)

HSAs have been gaining in popularity in recent years. At the end of 2014, consumers kept $24.2 billion across 13.4 million HSAs, according to a 2015 report from Employee Benefits Research Institute (EBRI). Nearly 4 in 5 of those accounts were opened after 2010. [...]

The advantage is in the "triple tax benefit," Carolyn McClanahan, a certified financial planner and director of financial planning for Life Planning Partners, told CNBC this week. Unlike use-it-or-lose-it flexible spending accounts, HSA balances roll over year after year, with tax-free investment growth. Withdrawals for medical expenses are tax-free at any age; distributions after age 65 for other purposes will be taxed at regular income-tax rates.

But it gets better. "You have to incur the medical expense after you establish the [HSA], but you can take it out five years later, 10 years later," said O'Rourke at Integrated Retirement Initiatives. So account holders who can afford to can pay out of pocket now and save their receipts, claiming the qualified distribution after the funds have had time to grow.

The scale is also bigger. Flexible spending accounts let users set aside a maximum of just $2,550 in pretax dollars in 2016 for medical expenses, while the annual contribution limits on HSAs are $3,350 for individuals and $6,750 for families. Account holders age 55 and older can make an additional $1,000 catch-up contribution.

Account holders may even benefit from free money in the form of employer contributions, either as a flat match or added incentive for healthy behaviors. "There's often a kick-start there to help pay for those deductibles in the first year," said O'Rourke.

Among large employers that offered a high-deductible plan and HSA in 2015, 24 percent awarded cash based on specified wellness activities, according to data benefits consulting firm Aon Hewitt. Among midsize companies, 18 percent offered such an incentive.

That's no small change. EBRI estimated that in 2014 the average employer contribution into HSAs was $1,021.

Posted by at February 19, 2016 11:03 AM