Kyl Amendments to Preserve, Improve HSAs.

The New York Times reported that as of the Friday 5 p.m. deadline, 564 amendments had been filed to Senator Max Baucus’ bill to reform healthcare.

One Senator, Jon Kyl, a Republican from Arizona, has offered up nine amendments aimed at preserving and improving Health Savings Accounts (HSAs).

Mark-up of the bill will begin Monday, September 22, at 9:00.

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KYL AMENDMENT #C9

America’s Healthy Future Act of 2009

Short Title: Ensuring Consumer Access to Catastrophic Coverage Options

Description of Amendment: The federal government shall not prohibit any individual, regardless of age, from enrolling in the “young invincible policy” or a high deductible health plan with a Health Savings Account.

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KYL AMENDMENT #C10

America’s Healthy Future Act of 2009

Short Title: Ensuring Consumer Choice of Health Care Benefits

Description of Amendment: The amendment would prohibit the federal government from limiting consumer choice by defining the health care benefits offered through private insurance.

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KYL AMENDMENT #C11

America’s Healthy Future Act of 2009

Short Title: Ensuring Consumers’ Choice of Insurance Options that Best Meet Their Health Care Needs

Description of Amendment: The federal government shall be prohibited from limiting consumer choice by setting actuarial values of health insurance plans.

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KYL AMENDMENT #C17

America’s Healthy Future Act of 2009

Short Title: Increase Current Limits on HSA Contributions

Description of Amendment: Under current law, contributions to HSAs are limited annually under a formula specified in the statute. The limits are adjusted annually for inflation by the IRS. In 2009 the annual contribution limit for self-only coverage is $3000 and for family coverage is $5,950. Prior to 2007, contributions could not exceed the individual’s HDHP deductible.

Although some HDHPs cover 100% of expenses after the deductible is met, many HDHPs charge co-insurance until a higher limit on out-of-pocket expenses (including deductibles, co-payments, and coinsurance) is met. Under current law, these limits cannot exceed $5,800 for HDHP self-only coverage and $11,600 for family coverage in 2009. The limits are adjusted annually for inflation by the IRS.

People with HSAs that have out-of-pocket limits above the annual HSA contribution limits cannot deposit enough money into their HSAs to cover all their potential out-of-pocket expenses. This amendment would increase the annual HSA contribution limits to equal the amount of the individual’s HDHP out-of-pocket maximum (i.e., as high as $5,800 for singles and $11,600 for families in 2009).

Effective Date: Upon Enactment Offset: The amendment would tie the premium tax credit to the lowest cost bronze plan.

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KYL AMENDMENT #C18

America’s Healthy Future Act of 2009

Short Title: Improved opportunities to rollover funds from Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs) to fund Health Savings Accounts (HSAs)

Description of Amendment: Current law allows employers that offered Flexible Spending Arrangements (FSAs) or Health Reimbursement Arrangements (HRAs) to roll over unused funds to an HSA as employees transitioned to an HSA for the first time. However, the unused FSA funds may not be rolled over to HSAs unless the employer offers a “grace period” that allows medical expenses to be reimbursed from an FSA through March 15 of the following year (instead of the usual “use or lose” by December 31) and must be made before 2012. In addition, the amount that may be rolled over to the HSA cannot exceed the amount in such an account as of September 21, 2006. This amendment would clarify current law to provide employers greater opportunity to roll-over of funds from employees’ FSAs or HRAs to their HSAs in a future year in order to ease the transition from FSAs and HRAs to HSAs.

Effective Date: Upon Enactment Offset: The amendment would tie the premium tax credit to the lowest cost bronze plan.

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KYL AMENDMENT #C19

America’s Healthy Future Act of 2009

Short Title: Catch-up contributions by spouses may be made to one Health Savings Account (HSA)

Description of Amendment: Current law allows HSA-eligible individuals age 55 or older to make additional catch-up contributions each year. However, the contributions must be deposited into separate HSA accounts even if both spouses are eligible to make catch-up contributions. This amendment would allow the spouse who is the HSA account holder to double their catch-up contribution to account for their eligible spouse. Effective Date: Upon Enactment

Offset: The amendment would tie the premium tax credit to the lowest cost bronze plan.

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KYL AMENDMENT #C20

America’s Healthy Future Act of 2009

Short Title: Expanded Definition of “Preventive” Drugs Description of Amendment: Current law allows “preventive care” services to be paid by HSA-qualified plans without being subject to the policy deductible. Although IRS guidance allowed certain types of prescription drugs to be considered “preventive care,” the guidance generally does not permit plans to include drugs that prevent complications resulting from chronic conditions.

This amendment would expand the definition of “preventive care” to include medications that prevent worsening of or complications from chronic conditions. This will provide additional flexibility to health plans that want to provide coverage for these medications and remove a perceived barrier to HSAs for people with chronic conditions. Effective Date: Upon Enactment Offset: The amendment would tie the premium tax credit to the lowest cost bronze plan.

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KYL AMENDMENT #C21

America’s Healthy Future Act of 2009

Short Title: Greater Flexibility Using HSA Account to Pay Expenses

Description of Amendment: When people enroll in an HSA-qualified plan, some let a few months elapse between the time when their coverage starts (e.g., January) and when the health savings bank account is set up and becomes operational (e.g., March). However, the IRS does not allow for medical expenses incurred in that gap (between January and March) to be reimbursed with HSA funds.

This amendment would allow all “qualified medical expenses” (as defined under the tax code) incurred after HSA-qualified coverage begins to be reimbursed from an HSA account as long as the account is established by April 15 of the following year.

Effective Date: Upon Enactment Offset: The amendment would tie the premium tax credit to the lowest cost bronze plan.

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KYL AMENDMENT #C22

America’s Healthy Future Act of 2009

Short Title: Expanded definition of “qualified medical expenses”

Description of Amendment: The current definition of “qualified medical expenses” generally does not include fees charged by primary care physicians that offer pre-paid medical services on demand because there is no direct billing for individual services provided by the physician and the arrangement is not considered “insurance.” This amendment would allow amounts paid by patients to their primary physician in advance for the right to receive medical services on an as-needed basis to be considered a “qualified medical expense” under the tax code.

The modification would affect all health care programs using the definition, including HSAs, HRAs, FSAs, and the medical expense deduction when taxpayers itemize. Effective Date: Upon Enactment Offset: The amendment would tie the premium tax credit to the lowest cost bronze plan.

3 thoughts on “Kyl Amendments to Preserve, Improve HSAs.

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