June 6, 2008
House of Representatives wants more control over HSAs | Two HSA studies released | Genetic non-discrimination to become law | Differential military pay -- HR 6081
House of Representatives wants more control over HSAs
Two HSA studies released
Genetic non-discrimination to become law
Differential military pay -- HR 6081
House of Representatives wants more control over HSAs
The House of Representatives has passed legislation which, if enacted, would require health savings account (HSA) holders to document to their account custodians (the banks or other financial institutions that manage HSA accounts) that requested distributions would be used for qualified medical expenses. Absent such proof, distributions would be subject to taxation and a 10 percent penalty. Present law and regulations make such distributions subject to audit only.
The provision was passed as a revenue raiser as part of a larger tax bill and faces an uncertain future in the U.S. Senate. The benefits community is totally united in opposition, claiming that HSA substantiation will raise administrative costs, discourage HSA enrollment and essentially have the effect Rep. Stark intends -- to suppress HSA growth. Employers also assert that there is no evidence that HSA distributions are not being used for qualified medical expenses, i.e., that there is no justification for the provision.
Meanwhile, the White House has signaled that President Bush would veto any legislation that contains the HSA substantiation requirement. It seems likely, therefore, that the legislation will not be approved by the Senate and that instead the U.S. Treasury would be directed to study the issue. To be sure, Evolution Benefits will have some explaining to do if it is to restore the company's credibility on future HSA and FSA issues.
Two HSA studies released
Last month, at the request of Democratic Congressmen Pete Stark and Henry Waxman, both from California, the Government Accountability Office (GAO) released a report regarding health savings account (HSA) participation and utilization.
Rep. Stark -- along with Rep. Waxman -- has been a staunch HSA opponent.
According to the GAO report, tax filers who have HSA's have higher incomes than those who do not. Tax filers who reported HSA activity in 2005 had an adjusted gross income of roughly $139,000, compared with about $57,000 for other filers. And 59 percent of tax filers with HSA's had AGIs of $60,000 or more, compared with 26 percent of other filers.
Separately, America's Health Insurance Plans (AHIP), an insurance industry trade group, released its annual census on health insurance plans, which found that over 6.1 million individuals are covered by HSA's -- up from 4.5 million a year ago. The report also found that more than a quarter of new enrollees in HSA's previously were uninsured.
The AHIP study shows that businesses are responding strongly to the cost savings and coverage benefits HSA's can offer. It's also significant that over 25 percent of new enrollees who purchased high deductible health insurance paired with an HSA were previously uninsured, especially as the U.S. presidential election has turned up the focus on expanding insurance coverage.
View the GAO report
View the AHIP report
Genetic non-discrimination to become law
After languishing in Congress for over a decade, the Genetic Information Nondiscrimination Act (GINA), a bill that bans discrimination on the basis of a person's genes was passed by both the House and Senate and is expected to be signed into law by President Bush.
Genetic testing to identify genes or genetic abnormalities that can foretell many common and potentially fatal diseases is becoming increasingly available, and the bill's supporters have long-argued that this information should not be used as a basis for health insurance pricing or employer hiring.
Once GINA is signed into law, insurance companies and employers will be prohibited from penalizing individuals for conditions or potential risks genetic tests reveal. The law will also protect information gathered from examining family disease histories.
While the law will bar insurers and employers from exacting financial penalties or making hiring decisions based on genetic testing, it will not prevent them from taking the information into account when making health coverage decisions.
Differential military pay -- HR 6081
The House and the Senate reached agreement in late May on legislation, the Heroes Earnings Assistance and Relief Tax (HEART) Act, that would finally clarify how employers must treat differential military pay for tax withholding and reporting purposes.
Since 1969 IRS regulations have specifically provided that former employees called up to active military service are no longer "employees," that employer payments are not to be considered "wages," and that federal income taxes and FICA taxes are not to be withheld.
Under pressure from the payroll community and others, Congress finally approved this legislation, HR 6081, that reverses IRS regulations and directs employers to withhold FIT and FICA taxes. Congress concluded that it was unrealistic to expect active duty military personnel to pay estimated taxes on differential military pay -- and tax withholding was superior to having veterans return home to outstanding tax bills.
House of Representatives wants more control over HSAs
Two HSA studies released
Genetic non-discrimination to become law
Differential military pay -- HR 6081
House of Representatives wants more control over HSAs
The House of Representatives has passed legislation which, if enacted, would require health savings account (HSA) holders to document to their account custodians (the banks or other financial institutions that manage HSA accounts) that requested distributions would be used for qualified medical expenses. Absent such proof, distributions would be subject to taxation and a 10 percent penalty. Present law and regulations make such distributions subject to audit only.
The provision was passed as a revenue raiser as part of a larger tax bill and faces an uncertain future in the U.S. Senate. The benefits community is totally united in opposition, claiming that HSA substantiation will raise administrative costs, discourage HSA enrollment and essentially have the effect Rep. Stark intends -- to suppress HSA growth. Employers also assert that there is no evidence that HSA distributions are not being used for qualified medical expenses, i.e., that there is no justification for the provision.
Meanwhile, the White House has signaled that President Bush would veto any legislation that contains the HSA substantiation requirement. It seems likely, therefore, that the legislation will not be approved by the Senate and that instead the U.S. Treasury would be directed to study the issue. To be sure, Evolution Benefits will have some explaining to do if it is to restore the company's credibility on future HSA and FSA issues.
Two HSA studies released
Last month, at the request of Democratic Congressmen Pete Stark and Henry Waxman, both from California, the Government Accountability Office (GAO) released a report regarding health savings account (HSA) participation and utilization.
Rep. Stark -- along with Rep. Waxman -- has been a staunch HSA opponent.
According to the GAO report, tax filers who have HSA's have higher incomes than those who do not. Tax filers who reported HSA activity in 2005 had an adjusted gross income of roughly $139,000, compared with about $57,000 for other filers. And 59 percent of tax filers with HSA's had AGIs of $60,000 or more, compared with 26 percent of other filers.
Separately, America's Health Insurance Plans (AHIP), an insurance industry trade group, released its annual census on health insurance plans, which found that over 6.1 million individuals are covered by HSA's -- up from 4.5 million a year ago. The report also found that more than a quarter of new enrollees in HSA's previously were uninsured.
The AHIP study shows that businesses are responding strongly to the cost savings and coverage benefits HSA's can offer. It's also significant that over 25 percent of new enrollees who purchased high deductible health insurance paired with an HSA were previously uninsured, especially as the U.S. presidential election has turned up the focus on expanding insurance coverage.
View the GAO report
View the AHIP report
Genetic non-discrimination to become law
After languishing in Congress for over a decade, the Genetic Information Nondiscrimination Act (GINA), a bill that bans discrimination on the basis of a person's genes was passed by both the House and Senate and is expected to be signed into law by President Bush.
Genetic testing to identify genes or genetic abnormalities that can foretell many common and potentially fatal diseases is becoming increasingly available, and the bill's supporters have long-argued that this information should not be used as a basis for health insurance pricing or employer hiring.
Once GINA is signed into law, insurance companies and employers will be prohibited from penalizing individuals for conditions or potential risks genetic tests reveal. The law will also protect information gathered from examining family disease histories.
While the law will bar insurers and employers from exacting financial penalties or making hiring decisions based on genetic testing, it will not prevent them from taking the information into account when making health coverage decisions.
Differential military pay -- HR 6081
The House and the Senate reached agreement in late May on legislation, the Heroes Earnings Assistance and Relief Tax (HEART) Act, that would finally clarify how employers must treat differential military pay for tax withholding and reporting purposes.
Since 1969 IRS regulations have specifically provided that former employees called up to active military service are no longer "employees," that employer payments are not to be considered "wages," and that federal income taxes and FICA taxes are not to be withheld.
Under pressure from the payroll community and others, Congress finally approved this legislation, HR 6081, that reverses IRS regulations and directs employers to withhold FIT and FICA taxes. Congress concluded that it was unrealistic to expect active duty military personnel to pay estimated taxes on differential military pay -- and tax withholding was superior to having veterans return home to outstanding tax bills.
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