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House committee approves boost in HSA contributions

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Employees could make bigger contributions to their health savings accounts, while colleges and universities that don't extend health insurance coverage to student employees would not be exposed to huge health insurance law penalties, under bills approved Wednesday by the House Ways and Means Committee.

Under H.R. 5445, approved on a 23-15 vote, employees enrolled in high-deductible plans and opting for single coverage could in 2017 contribute up to $6,500 to their HSAs, while those with family coverage could contribute up to $13,100. Under current law, the 2017 maximum HSA contributions are $3,400 for employees with single coverage and $6,750 for family coverage.

“The idea is to allow employees to fund all their out-of-pocket costs — except plan premium costs — through their HSA contributions,” said James Gelfand, senior vice president of health policy at the ERISA Industry Committee in Washington.

The measure also would bump up how much older employees could contribute to HSAs. Under current law, employees age 55 and older can make an extra $1,000 annual so-called “catch-up” contribution to their HSAs. Under the bill, if the employee had an age-55 or older spouse, another $1,000 HSA catch-up contribution would be permitted.

Another measure, H.R. 210, approved by the panel on a voice vote, would allow colleges and universities to exclude students they employ, such as teaching assistants, from an ACA provision that imposes a big penalty — currently $2,160 for each full-time employee — on employers that do not offer coverage to at least 95% of full-time employees, those working an average of at least 30 hours per week.

Without congressional action, the extension of the employer mandate to college and university student employees is set to begin next year. Those institutions now often pay all or most of the premiums for individual policies purchased from insurers for the teaching assistants, an approach that no longer would pass muster under the IRS rules.

Educational institutions strongly back the legislation. “Schools are already under budgetary restraints. As a result, the mandate could force institutions to choose between ensuring that some needy students have sufficient work opportunities to pay for school versus limiting student work hours to avoid additional health insurance costs,” Terry Hartle, senior vice president at the American Council on Education in Washington, wrote in a letter earlier sent to Rep. Mark Meadows, R-N.C., the sponsor of the legislation.

The legislation, the Student Worker Exemption Act, “provides a reasonable solution to this challenge by exempting full-time students from the ACA's employer mandate,” Mr. Hartle added.