December 20, 2006
HP-209
Washington, DC- President George W. Bush signed the Health Opportunity Patient Empowerment Act of 2006 today, enhancing Americans' access to tax-advantaged health care savings. The law, part of the Tax Relief and Health Care Act of 2006, provides new opportunities for health savings account (HSA) participants' to build their funds.
"Health savings accounts are improving the way Americans obtain the care they need. This bill makes HSAs more flexible and makes it easier for participants to put money aside for their personal health care," said Treasury Assistant Secretary for Tax Policy Eric Solomon.
HSA provisions of the Act include:
Allow rollovers from health FSAs and HRAs into HSAs through 2011. Employers can transfer funds from Flexible Spending Arrangements (FSAs) or Health Reimbursement Arrangements (HRAs) to an HSA for employees switching to coverage under an HSA-compatible health plan. The amounts rolled over to HSAs from FSAs or HRAs are over and above the amounts allowed as annual contributions. The maximum contribution is the balance in the FSA or HRA as of September 21, 2006, or if less, the balance as of the date of the transfer. The provision is limited to one distribution with respect to each health FSA or HRA of the individual. If an individual does not remain an eligible individual for the 12 months following the month of the contribution, the transferred amount is included in income and subject to a 10 percent additional tax.
Increase in annual HSA contribution. Previously, the maximum HSA contribution was the lesser of the deductible of the individual's HSA-eligible plan or a statutory maximum. The new rules make the limit the statutory maximum contribution, regardless of the individual's deductible. For 2007, the maximum contribution for an eligible individual with self-only coverage is $2,850, and the maximum contribution for an eligible individual with family coverage is $5,650. These limits are indexed for inflation.
Full HSA contribution regardless of month individual becomes eligible. Normally, the HSA contribution is pro rated based on the number of months that an individual during the year a person was an eligible individual. The new provisions provide an exception to this rule that will allow individuals who become covered under an HSA-eligible plan in a month other than January to make the maximum HSA contribution for the year based on their coverage in the last month of the year. This eliminates a common barrier to switching to HSA-eligible coverage. If an individual does not stay in the HSA-eligible plan 12 months following the last month of the year of the first year of eligibility, the amount which could not have been contributed except for this provision will be included in income and subject to a 10 percent additional tax.
One-time transfer from IRAs to HSAs. The new rules allow for a one-time contribution to an HSA of amounts distributed from an Individual Retirement Arrangement (IRA). The contribution must be made in a direct trustee-to-trustee transfer. The IRA transfer will not be included in income or subject to the early withdrawal additional tax. The transfer is limited to the maximum HSA contribution for the year, and the amount contributed is not allowed as a deduction. Generally, only one transfer may be made during the lifetime of an individual. If an individual electing the one-time transfer does not remain an eligible individual for the 12 months following the month of the contribution, the transferred amount is included in income and subject to a 10 percent additional tax.
Certain FSA coverage treated as disregarded coverage. Under previous law, if an FSA had a grace period following the end of the plan year allowing participants to incur additional reimbursable expenses, participants were treated as having disqualifying coverage, reducing their HSA contribution for that year, even though they had switched to HSA-eligible coverage at the first of the year. The new rules treat certain FSA coverage during a grace period as disregarded coverage, eliminating any resulting reduction in the HSA contribution for the year. First, the coverage is disregarded if the balance in the health FSA at the end of the plan year is zero. Second, the coverage is disregarded if the year-end balance is transferred directly to an HSA fom the FSA, as noted above.
Earlier indexing of cost of living adjustments. Previously, indexing was based on a 12-month period ending on August 31. The new rules change the base period to the 12-month period ending on March 31 and require that adjusted amounts for a year be published by June 1 of the preceding year. This change will provide employers and health plans with more time to design qualifying HSA-eligible plans and individuals with more time to make decisions about their health care for the next year.
Allow greater employer contributions for lower-paid employees. Previously, employer contributions under the comparability rules had to be the same amount or percentage of the deductible for all employees with the same category of coverage. Consequently, employers could not contribute higher amounts to lower-paid employees. The new rules provide an exception to the comparability rules allowing employers to contribute more to the HSAs of non-highly compensated individuals. For this purpose, the definition of "highly compensated employee" is based on same definition used for qualified retirement plans.
-30-
Wednesday, October 15, 2008
Sunday, October 12, 2008
Health care takes a back seat in the election
By: Lelia Chaisson
Posted: 10/9/08
Two years ago, Americans couldn't get enough of the health care debate. With Massachusetts leading the way to universal coverage, health care dominated the headlines. Forty-seven million uninsured, staggering U.S. expenditures on medical technology and lagging U.S. health statistics were disturbingly familiar, and it seemed certain that America was on its way to health care reform.
So what happened?
Right in the middle of our attempt to fix the "broken system," health care lost its momentum, much as it did in the 1990s with Hillary Clinton's failed attempt to revolutionize it. In both cases, huge movements swiftly lost their authority and eventually faded into the background, leaving Americans to deal with the ever increasing costs of health care. It seems that, despite the perpetual health care calamity in America, every time we get close to making some progress, health care disappears from the headlines.
Health care has once again taken a back seat in the 2008 election, despite the fact that recently published reports show that access to health care remains a considerable problem for more American families than ever before. Indeed, the Center for Studying Health System Change recently disclosed that almost one in five families struggled to pay medical bills last year; Twenty percent of those having problems even considered declaring personal bankruptcy. Nor is the issue limited to those without medical insurance. Reports indicate that of the 57 million Americans under pressure, 43 million have some form of insurance. The health care crisis is far from over, yet real reform is not even on the horizon.
Why is it so hard to get the ball rolling on health care? It's not because Americans don't want health care reform. While the issue has slipped behind the financial crisis and the Iraq war in the current election, it remains firmly in the top three issues among all demographics. Nor is it for lack of ideas. Over the years myriad diverse plans have been proposed by Republicans and Democrats alike.
I can only conclude that the standstill is due to the public's wishy-washiness. Americans simply don't know what they want. Or, rather, they know what they want, but they aren't willing to take any of the necessary steps to get it. What is perhaps the most interesting thing about this debate is the combination of America's conviction that every person should have access to affordable, high-quality care, and its simultaneous skepticism concerning every proposed plan for change.
Just look at the public's reaction to some of the ideas for reform. To the suggestion that we require coverage for every American to promote preventive care comes the loud retort that forcing everyone to have insurance is un-American. To the notion that we should cut spending on costly, infrequently used procedures comes the cry that Americans should have access to any medical procedure they could ever possibly want, nevermind the price tag.
Now, I'm not saying that all of these ideas are perfect. I'm just pointing out the irony that Americans demand affordable coverage and access for all, yet reject any policy that has the potential to address these problems.
America's fickleness has reared its head once again in the current election. On the one hand, Barack Obama has suggested creating a national health plan available to all Americans, with guaranteed eligibility, benefits similar to those offered in the plan available to members of Congress and subsidies for those who do not qualify for Medicaid or SCHIP but still need financial aid.
Seemingly, his plan has addressed every criticism. No mandate for universal coverage. Affordable care for every American. Guaranteed access. Choice between private and employer-based coverage.
The public's reaction? Obama's plan is too costly and will create too much regulation.
Senator McCain, on the other hand, wants nothing close to a national health care plan, and instead advocates stimulating the private market and doing away with tax breaks for employer-based health insurance.
Now, come on. Voters say they want to ensure affordable coverage for every American. They say they want to take some of the power away from greedy insurance companies that deny care to the sick and disadvantaged. Is there really any question as to which plan will better address these issues? Granted, Obama's plan is going to be expensive. But let's be serious. Doing away with tax breaks will encourage employers to do away with their health care plans. And a $5,000 tax credit will be a drop of water in a sea of health care costs, which now average $12,680 a year for U.S. families. In addition to this, it is widely speculated that McCain's plan will leave millions of people uninsured and give more power to the insurance companies everyone despises.
But, in the end, no matter who gets elected, I doubt we'll ever get far enough to see either of these plans enacted. America loves to talk the talk, but won't walk the walk. When given the choice of actually addressing their constantly reiterated concerns about health care or doing nothing, Americans consistently choose the latter.
Posted: 10/9/08
Two years ago, Americans couldn't get enough of the health care debate. With Massachusetts leading the way to universal coverage, health care dominated the headlines. Forty-seven million uninsured, staggering U.S. expenditures on medical technology and lagging U.S. health statistics were disturbingly familiar, and it seemed certain that America was on its way to health care reform.
So what happened?
Right in the middle of our attempt to fix the "broken system," health care lost its momentum, much as it did in the 1990s with Hillary Clinton's failed attempt to revolutionize it. In both cases, huge movements swiftly lost their authority and eventually faded into the background, leaving Americans to deal with the ever increasing costs of health care. It seems that, despite the perpetual health care calamity in America, every time we get close to making some progress, health care disappears from the headlines.
Health care has once again taken a back seat in the 2008 election, despite the fact that recently published reports show that access to health care remains a considerable problem for more American families than ever before. Indeed, the Center for Studying Health System Change recently disclosed that almost one in five families struggled to pay medical bills last year; Twenty percent of those having problems even considered declaring personal bankruptcy. Nor is the issue limited to those without medical insurance. Reports indicate that of the 57 million Americans under pressure, 43 million have some form of insurance. The health care crisis is far from over, yet real reform is not even on the horizon.
Why is it so hard to get the ball rolling on health care? It's not because Americans don't want health care reform. While the issue has slipped behind the financial crisis and the Iraq war in the current election, it remains firmly in the top three issues among all demographics. Nor is it for lack of ideas. Over the years myriad diverse plans have been proposed by Republicans and Democrats alike.
I can only conclude that the standstill is due to the public's wishy-washiness. Americans simply don't know what they want. Or, rather, they know what they want, but they aren't willing to take any of the necessary steps to get it. What is perhaps the most interesting thing about this debate is the combination of America's conviction that every person should have access to affordable, high-quality care, and its simultaneous skepticism concerning every proposed plan for change.
Just look at the public's reaction to some of the ideas for reform. To the suggestion that we require coverage for every American to promote preventive care comes the loud retort that forcing everyone to have insurance is un-American. To the notion that we should cut spending on costly, infrequently used procedures comes the cry that Americans should have access to any medical procedure they could ever possibly want, nevermind the price tag.
Now, I'm not saying that all of these ideas are perfect. I'm just pointing out the irony that Americans demand affordable coverage and access for all, yet reject any policy that has the potential to address these problems.
America's fickleness has reared its head once again in the current election. On the one hand, Barack Obama has suggested creating a national health plan available to all Americans, with guaranteed eligibility, benefits similar to those offered in the plan available to members of Congress and subsidies for those who do not qualify for Medicaid or SCHIP but still need financial aid.
Seemingly, his plan has addressed every criticism. No mandate for universal coverage. Affordable care for every American. Guaranteed access. Choice between private and employer-based coverage.
The public's reaction? Obama's plan is too costly and will create too much regulation.
Senator McCain, on the other hand, wants nothing close to a national health care plan, and instead advocates stimulating the private market and doing away with tax breaks for employer-based health insurance.
Now, come on. Voters say they want to ensure affordable coverage for every American. They say they want to take some of the power away from greedy insurance companies that deny care to the sick and disadvantaged. Is there really any question as to which plan will better address these issues? Granted, Obama's plan is going to be expensive. But let's be serious. Doing away with tax breaks will encourage employers to do away with their health care plans. And a $5,000 tax credit will be a drop of water in a sea of health care costs, which now average $12,680 a year for U.S. families. In addition to this, it is widely speculated that McCain's plan will leave millions of people uninsured and give more power to the insurance companies everyone despises.
But, in the end, no matter who gets elected, I doubt we'll ever get far enough to see either of these plans enacted. America loves to talk the talk, but won't walk the walk. When given the choice of actually addressing their constantly reiterated concerns about health care or doing nothing, Americans consistently choose the latter.
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