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We have a message for Congress: Take action by passing health savings account reform legislation.
As we report on page 1, the House Ways and Means Committee last week cleared what we call a common-sense measure that would remove some of the inequities employees with HSAs now face.
For example, take the situation of an employee who switches jobs late in the year and begins to work on Dec. 1 for a new employer, which offers only an HSA-linked health insurance plan. Under current rules, the contribution to the HSA could be no more than one-twelfth of the annual maximum. That doesn't seem very fair as employees, regardless of when they are hired, face the same exposure to unexpected big medical care expenses.
The bill would remove that inequity by not basing the maximum HSA contribution on when an employee became eligible for the HSA.
Or, consider this illogical current requirement that affects employees with HSAs whose employers have adopted grace periods for flexible spending accounts, giving workers another 10 weeks after the end of the prior plan year to spend the balance remaining in their FSAs. Such grace periods reduce the likelihood of forfeiting FSA balances at the end of the plan year. Under current rules, however, even if employees' FSA account balances are zero at the end of the prior year and their employer has an FSA grace period, workers can't make contributions to their HSA until the first month following the end of the FSA grace period.
If there is logic in that restriction it certainly escapes us. The remedy adopted by the Ways and Means Committee is simple but effective: Allow employees with zero FSA balances to make HSA contributions during the grace period or, if there is a balance, allow the employee to transfer that money to the HSA.
There are a host of other common-sense changes, including making it easier for employers to move from health reimbursement arrangements--the first generation of consumer-driven health care plans--to HSAs, and allowing employees in certain situations to contribute more to HSAs, build up bigger balances and thus be better able to meet future medical expenses.
Some members of Congress may feel that it is too early--given that HSAs have been around for only a couple of years--to change HSA rules.
But we believe it is never too soon to adopt logical, common-sense changes, which the Ways and Means package clearly is, and we urge federal legislators to do so quickly upon their return to Washington following the November elections.