Hatch bill would expand health savings accounts

A bill introduced Thursday by Sen. Orrin Hatch (R-Utah) would repeal part of the healthcare reform law and expand the use of tax-exempt health savings accounts.

The healthcare law restricts the use of plans that offer low premiums but carry high deductibles. Small businesses cannot offer policies with deductibles of more than $2,000 to individual employees. For families, the upper limit is $4,000.

Hatch’s bill would repeal those restrictions, allowing small businesses to keep offering high-deductible plans. 

The rest of the bill deals primarily with health savings accounts (HSAs) — tax-preferred accounts that can be used only for healthcare purchases. The healthcare reform law prohibits the use of HSAs to pay for over-the-counter drugs without a doctor’s prescription. Hatch’s proposal would lift that ban.

Even before healthcare reform took effect, money that people put into flexible spending accounts could not carry over from one year to the next. Under Hatch’s proposal, people could roll over $500 of their FSA savings.

Current law also doesn’t allow people to use HSAs to pay for insurance premiums unless they’re unemployed. Hatch would tweak that limitation so that an HSA could be used to buy long-term insurance and other “qualified policies.”

“This legislation will provide American workers and retirees with a common-sense way of improving access to quality, affordable healthcare,” Hatch said in a release. “These health plans empower Americans to take control of their health and well-being.”

— This post was updated at 12:20 p.m.

---