HSA, FSA rules keep candidates guessing

When it comes to getting the facts straight on health care issues, presidential candidates need to brush up.

Take Republican frontrunner Donald Trump. In his health care position paper released this month, Mr. Trump says individuals should be allowed to use “health savings accounts. Contributions into HSAs should be tax-free and should be allowed to accumulate.”

Congress authorized HSAs in 2003. The appeal of the accounts linked to high-deductible health plans is that employee contributions can be made on a pretax basis and can be withdrawn tax-free to pay for uncovered health care expenses. And amounts unused at year-end can be rolled over indefinitely to pay for succeeding years' expenses.

In 2015, nearly 20 million people were enrolled in HSA-linked health plans: 15.4 million in plans offered by employers with at least 51 employees, 2.3 million in the small employer market and just over 2 million in the individual market, according to an America's Health Insurance Plans survey.

Among other health care gaffes, Sen. Marco Rubio, R-Fla., who withdrew from the presidential campaign this month after poor results in several primaries, including his home state of Florida, said on his campaign website that aside from supporting the “full repeal of Obamacare, Marco has voted to specifically repeal harmful components of the law,” including “new taxes” on flexible spending accounts and HSAs.

The Patient Protection and Affordable Care Act did not impose new taxes on FSAs and HSAs. What the law did was impose a $2,500 annual limit — indexed for inflation — on employees' pretax FSA contributions. Before that, tax law did not impose an annual limit on FSA contributions, though employers typically sets limits at $4,000 to $5,000 annually.