House Passes HSA Documentation Rules
Issue: Tax-Free Payment of Medical Expenses from HSAs
Date: April 16, 2008
Action Taken: As predicted, the House on a mostly party-line vote (238-179) passed The Taxpayer Assistance and Simplification Act of 2008 (H.R. 5719) on April 15 including a provision to require substantiation for withdrawals from health savings accounts.
Background: The $1 billion-plus bill is largely paid for by the new HSA substantiation rules, with the requirements set to begin after Dec. 31, 2010.
AHIA, NAIFA and other interested parties registered their concerns with the Ways & Means Committee prior to the committee’s mark-up of the bill on April 9. As a result, the committee changed the original proposal’s effective date (to distributions made after 12/31/10) to give Treasury and the private sector time to work out the difficulties of implementing a documentation and substantiation requirement. AHIA and NAIFA, however, believe that current law substantiation rules—reporting of distributions by the HSA trustee, and by the HSA owner on his/her tax return—are sufficient. Thus, AHIA and NAIFA continue to oppose the House-passed provision, despite the delayed effective date offered as a compromise by the Ways & Means Committee.
AHIA and NAIFA also urged the Senate Finance Committee to oppose the HSA provision. While a positive outcome in the Senate cannot be guaranteed at this point, it does appear that the concerns AHIA and NAIFA discussed with Finance Committee personnel may prevail (although several Democrats there have asked how to make the provision tolerable).
The Administration has issued a Statement of Administration Policy (SAP) recommending a veto of a bill that contains the HSA restrictions.
AHIA – NAIFA Health & Employee Benefits Position: AHIA and NAIFA are opposed to the HSA provision in H.R. 5719 that would create additional complexity and cost to HSA account holders.
AHIA, NAIFA’s health and employee benefits advocate, is participating in Senate discussions to be sure the implementation of any additional HSA documentation, if enacted, is done in a way that will not be burdensome and costly for HSA/HDHP policyholders.
The grassroots participation on this issue thus far has been tremendous. Thank you for your involvement. Please watch for additional GovAlerts as this issue heats up.
AHIA/NAIFA Staff Contact: For additional information, please contact Diane Boyle at Dboyle@naifa.org.
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