HR548-119

What This Bill Does

The HSA Modernization Act expands who can contribute to health savings accounts and what HSA-linked coverage can look like. It removes a restriction that prevented certain veterans without service-connected disability care from contributing after receiving VA benefits. It allows people entitled to Medicare Part A by age to remain eligible for HSA contributions, with related distribution coordination. It says receiving Indian Health Service or tribal organization medical care does not count as disqualifying coverage. It treats ACA bronze and catastrophic plans as high deductible health plans for HSA purposes. It creates a safe harbor allowing high deductible health plans to cover up to the first $500 of mental health benefits without a deductible. It treats medical expenses incurred after high-deductible coverage begins as qualified if the HSA is opened within 60 days. It allows both spouses to make catch-up contributions to the same HSA, raises maximum HSA contributions to the high deductible plan deductible and out-of-pocket limits, and clarifies that qualified long-term care services are qualified medical expenses.

Who Benefits and How

Veterans using VA health benefits benefit because more VA care no longer blocks HSA contribution eligibility. Older workers enrolled in Medicare Part A benefit because age-based Part A entitlement would not automatically end HSA contributions. Tribal health program users benefit because Indian Health Service or tribal care does not disqualify HSA eligibility. HSA holders benefit from higher contribution limits, spousal catch-up contributions, and coverage of long-term care services.

Who Bears the Burden and How

Internal Revenue Service examiners must administer multiple new HSA eligibility and contribution rules. Health plan administrators must update bronze, catastrophic, mental-health, and high deductible health plan rules. Employers offering HSA-compatible plans must update payroll, benefits communications, and account timing procedures. Federal taxpayers bear the revenue cost of larger HSA deductions and expanded eligibility.

Key Provisions

• Expands HSA eligibility for certain veterans, Medicare Part A enrollees, and Indian Health Service users.
• Treats bronze and catastrophic plans as high deductible health plans for HSA purposes.
• Provides a $500 mental health first-dollar safe harbor.
• Allows 60-day retroactive treatment for medical expenses after high deductible coverage begins.
• Raises contribution limits, permits spousal catch-up contributions in one account, and covers long-term care services.