New Type of Healthcare Savings Account Introduced

Representative Blake Moore (R-UT) along with five other Congressmen have introduced the Health Out-of-Pocket Expense (HOPE) Act, to enable more Americans with most types of insurance coverage to save for health care costs with individual and employer contributions.

According to a press release, these new accounts that are like Roth health savings accounts would be subject to the following requirements:

• Anyone with qualifying coverage, including in the commercial market, Medicare, Medicaid, the Indian Health Service, and other sources of health care coverage would be eligible to contribute to a HOPE Account.
• An individual’s contributions would not be tax deductible, though employer contributions are deductible to the employer, as well as excludible from income and employment tax for individuals with an adjusted gross income of $100,000 or less or $200,000 or less for a family.
• Employers and state programs may annually make contributions to a HOPE Account of up to 50% of the annual limit. 
• The maximum annual contribution from all sources to a HOPE Account is $4,000 for those with self-only coverage, or for married individuals with separate HOPE Accounts.  For those with family coverage, that amount is $8,000 for a head of household or married individuals filing jointly who elect to set up a family account. Any contributions to an HSA, FSA, or HRA reduce the maximum contribution to a HOPE Account that year.
• As the account grows, the earnings remain tax-free if the funds are used for qualified medical expenses. 

Eligibility for existing Health Savings Accounts is contingent on coverage under a qualifying high-deductible health plan, with no other disqualifying health coverage or enrollment in Medicare. Various proposals to “decouple” Health Savings Accounts from these requirements have been unsuccessful.