The House of Representatives passed two pieces of legislation that, among other things, purport to improve and “modernize” health savings accounts (“HSAs”).
While the bills call for significant changes to the current rules affecting HSAs, the specific details are very different. Summary of Proposed Changes H.R. 6199 would:

• Exclude a direct primary care service arrangement
from being treated as a disqualifying coverage for
purposes of HSA eligibility. This would apply so long as
the aggregate fees for all services do not exceed $150/
month (or $250/month for coverage for more than one
• This would not include: procedures that require
anesthesia, prescription drugs (other than vaccines),
and laboratory services not typically administered in
a primary care setting.
• This would permit reimbursement from the HSA
on a tax-free basis for direct primary care service
arrangements subject to the monthly dollar limits
described above. However, such fees are reportable
for information purposes on the Form W-2.
The two bills are:
• H.R. 6199, Restoring Access to Medication and
Modernizing Health Savings Accounts Act of 2018
(for a copy, visit
• H.R. 6311, Increasing Access to Lower Premium
Plans and Expanding Health Savings Accounts
Act of 2018 (for a copy, visit

This document is designed to highlight various employee benefit matters of general interest to our readers. It is not intended to interpret laws or regulations, or to address specific client situations. You should not act or rely on any information contained herein without seeking the advice of an attorney or tax professional. ©2018 Emerson Reid, LLC. All Rights Reserved. CA Insurance License #0C94240.

• Permit individuals to maintain HSA eligibility when,
in connection with employment, the individual (or the
individual’s spouse) receives (or is eligible to receive)
“qualified items and services” at:
• A health care facility located at a facility of the
employer operated primarily for the benefit of the
employer’s employees (e.g., an onsite clinic)
• Health care facilities located within supermarkets,
pharmacies, or similar retail locations
• For purposes of the above, “qualified items and
services” are limited to the following:
• Physical examinations,
• Immunizations,
• Drugs other than prescribed drugs,
• Treatment for injuries occurring during
• Drug testing as a requirement of employment.
• Hearing and visions screenings, and
• Other similar items and services that do not
provide significant medical benefits.
• Treat a spouse’s traditional health FSA coverage
as non-disqualifying coverage for purposes of an
employee’s HSA eligibility in certain instances.
• Create additional flexibility for health FSA and HRA
conversions to fund HSAs including a conversion to
HSA compatible arrangements for the remainder for
the year.
• Expand the definition of a qualified expense
for purposes of health FSA, HRA, and HSA
reimbursement to include certain menstrual
care products and qualified sports and fitness
expenses up to $500 (or $1,000 family) (e.g., gym
H.R. 6311 would:
• With respect to HSAs:
• Expand HSA eligibility to age-based Medicare
Part A eligible individuals (i.e., individuals age
65 and older).
• Increase the maximum annual HSA contribution
to match the out-of-pocket limit (as opposed to an
IRS defined limit usually well below the maximum
out of pocket).
• Permit both spouses to make catch-up contributions
to a single HSA (as opposed to requiring each
spouse to have his/her own HSA to make a
catch-up contribution).
• Permit Bronze and Catastrophic plans to qualify as
a high deductible health plan (“HDHP”) for purposes
of HSA eligibility.
• Permit reimbursement of qualified medical expenses
incurred within a 60-day period prior to the
establishment of the HSA.
• Create a “Premium Copper Plan” in the individual
• Increase the health FSA carryforward from a maximum
of $500 to the remaining account balance at the end of
the year.
• Delay reinstatement of the Annual Fee on Health
Insurance Carriers until January 1, 2022.

Both pieces of legislation have been sent to the Senate for
consideration. Whether the Senate will take up these bills, let
alone approve them “as is,” remains uncertain. There appears
to be some bi-partisan appetite to loosen the current HSA
rules, which means it is possible that we may see changes
to these arrangements, which could be effective as early as
January 1, 2019. We will continue to keep you apprised.

Cosmo Insurance Agency is an independent insurance agency serving surrounding communities in New Jersey. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating the latest in technology-based tools and laws on healthcare, employee benefits, life insurance and finance, we keep our clients up-to-date with the plans that encompass all of their needs, whether it is individual or group insurance.


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