Industry & Regulatory NewsHealth Savings for Seniors Act Reintroduced in House
Representatives Ami Bera (D-CA) and Jason Smith (R-MO) have reintroduced the “Health Savings for Seniors Act” (H.R. 3796) to permit those enrolled in Medicare to contribute to a health savings account (HSA). Pursuant to the Internal Revenue Code (the Code), an individual is eligible to contribute to an HSA if, among other things, the individual is not a participant in Medicare. The Act would amend the Code to remove this restriction if the individual is enrolled in a Medicare plan that has an annual deductible of $1,000 for self-only coverage and $2,000 for family coverage and the annual deductible plus the annual out-of-pocket expenses does not exceed $5,000 for self-only coverage and $10,000 for family coverage. The Act would also amend the Code to prohibit use of HSA funds to pay for Medicare premiums and any Medicare enrollee would be allowed to spend HSA funds only on medical expenses. Currently, individuals with an HSA account are able to spend the HSA contributions for any purpose, including medical expenses, once the individual turns 65, regardless of Medicare enrollment.
Industry & Regulatory NewsProtecting America’s Retirement Security Act Approved by Committee
The House Committee on Education and Labor approved by a 29-21 party line vote to release the Protecting America’s Retirement Security Act without amendments to the House floor for consideration. The bill contains the following retirement plan proposals.
- Requires the Department of Labor, within two years of enactment, to explore how disclosure requirements for participant directed individual account plans can be improved to enhance participants’ understanding of fees and expenses and their cumulative effect on savings over time
- Amends the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code to require spousal consent and notarization for all distributions, with certain exceptions
- Amends ERISA and the Internal Revenue Code to require eligible employees who are not participating in the plan to be re-enrolled at least every 3 years for any automatic contribution arrangement that becomes effective after December 31, 2024
Industry & Regulatory NewsHouse Passes Affordable Insulin Now Act
The House has passed the Affordable Insulin Now Act (the “Act”) to limit the cost of insulin to either $35 or 25 percent of the plan’s negotiated price, whichever is less. Group health plans or health insurance issuers of group or individual insurance would be required to implement the coverage of insulin products beginning January 1, 2023. In addition, the Act caps the cost-sharing limit under Medicare to $35 in 2023, even if the individual has reached the annual out-of-pocket limit and to $35 in 2024 for those who have not yet reached their annual out-of-pocket limit. The legislation must still pass the Senate before it is enacted.
Industry & Regulatory NewsProtecting America’s Retirement Security Act Introduced in House
Representative Lucy McBath (D-GA) and five other Democratic co-sponsors have introduced the Protecting America’s Retirement Security Act in the House of Representatives. The bill proposes fee disclosure improvements, increasing spousal protections, and automatic reenrollment for defined contributions plans. Additionally, the bill would direct the creation of a personal finance education portal as well as a rainy-day refund savings program that would allow taxpayers to elect deferment of 20 percent of their tax refund to an interest-bearing account that would be available for distribution at a later date.
Industry & Regulatory NewsHealth Care Equality and Modernization Act Introduced in House
Representative Peter Sessions introduced the Health Care Equality and Modernization Act of 2022 (the “Act”) in the House of Representatives. The Act contains various provisions that would amend the Affordable Care Act (ACA), redefine individual health coverage HRAs (“ICHRAs”), limit premium tax credits, and improve health savings accounts (HSAs).
The Act would repeal the ACA employer mandate and related information reporting, limit consumer protections, and impose a 20 percent penalty assessed as a premium increase for any individual that does not have continuous health insurance coverage for a period of 12 months. The Act would redefine ICHRAs to no longer treat them as group health plans pursuant to the ACA, ERISA, or the IRC. In addition, the Act would not require ICHRAs to comply with various federal laws, including ERISA, the IRC, the ACA, COBRA, and HIPAA. The Act would also limit premium tax credits to those individuals in states that have expanded the Exchange to all areas. Premium tax credits may also be used, at the discretion of the individual, to fund an HSA. Related to HSAs, the Act would increase the individual contribution limit to $5,000 and the family limit based on the number of individuals enrolled in family coverage. Upon the death of the account holder, the Act would also permit for easier transfer by treating the surviving spouse as the named account holder.
Industry & Regulatory NewsHouse Passes Spending Bill That Would Include Telehealth Extension
The House of Representatives on Wednesday passed a substantial $1.5 Trillion omnibus spending package to fund the government. Included in the bill is a provision that would temporarily allow expenses for telehealth and other remote care services to continue be paid from a health savings account (HSA) without first meeting the deductible under the high deductible health plan (HDHP). The provision would allow the deductible to be disregarded for the period April 1, 2022, through December 31, 2022.
Previously, the Coronavirus Aid, Relief, and Economic Security (CARES) Act amended the same provision to temporarily cover telehealth and remote care services without meeting the deductible for the period after January 1, 2020, for plan years beginning on or before December 31, 2021.
While the provision, if enacted, would allow additional temporary flexibility for HSA owners to cover telehealth expenses from their accounts before meeting deductibles, it is important to note that due to the timing of the expiration of the CARES relief and the extension proposed in the legislation, telehealth services for the period January 1, 2022, through March 31, 2022, would be subject to the HDHP deductible requirements before they would be considered a qualified medical expense for HSA purposes.
The bill now heads to the Senate, where a vote is expected by a Friday funding deadline. However, House lawmakers also passed a stopgap measure by voice vote that lasts until Tuesday to ensure that the Senate has enough time to clear the omnibus package without risking a government shutdown.
Industry & Regulatory NewsEnhancing Emergency and Retirement Savings Act Introduced in House
Representative Brad Wenstrup (R-OH) has introduced the Enhancing Emergency and Retirement Savings Act of 2022 to provide flexibility and access for those who experience unexpected emergencies. The bill is the House companion to S. 1870, introduced by Senator James Lankford (R-OK) and Senator Michael Bennet (D-CO) last year.
The legislation would provide a penalty-free “emergency personal expense distribution” option from employer-sponsored retirement plans and IRAs. The proposal would allow for one emergency distribution per calendar year of up to $1,000 from the individual’s total nonforfeitable accrued benefit under the plan. The bill requires that the withdrawn funds be paid back to the plan before an additional emergency distribution from that same plan is allowed. The amount can be recontributed within a three-year period to any eligible plan to which a rollover contribution can be made.
An emergency personal expense distribution is defined as a distribution for purposes of meeting unforeseeable or immediate financial need relating to necessary personal or family emergency expenses. The plan sponsor of an employer-sponsored retirement plan may rely on an employee’s certification that the conditions are satisfied in determining whether the distribution is an emergency distribution.
Industry & Regulatory NewsLong-Term Care Affordability Act Introduced
Representative Ann Wagner (R-MO) has introduced the Long-Term Care Affordability Act to allow distributions from retirement accounts for the payment of long-term care insurance coverage. The bill is the House companion to S.2415 introduced in the Senate by Senator Patrick Toomey (R-PA) last year.
The proposal would permit tax-free retirement saving distributions of up to $2,500 per year—indexed for inflation—that are used to purchase long-term care insurance. The arrangements to which the legislation applies would include qualified retirement plans, 403(a) and 403(b) plans, governmental 457(b) plans, and IRAs. These distributions would also be exempt from the 10 percent early distribution penalty tax. The bill would also create new distribution triggers for employee deferral amounts that have been contributed to 401(k), 403(b), and governmental 457(b) plans.
Industry & Regulatory NewsLegislation Proposed to Expand Qualified Medical Expenses to Include Infant Diapers
Senator Joni Ernst (R-IA) has introduced the Diaper Inclusion in Accounts for Parental Expense Reduction (DIAPER) Act. The bipartisan bill would allow the use of flexible spending accounts (FSAs) and health savings accounts (HSAs) to be used to purchase disposable infant diapers as qualified medical expenses. Any progress of the bill through Congress will be monitored, and details provided as they become available.
Industry & Regulatory NewsLegislation Proposed to Promote Retirement Plan Lifetime Income Options
Legislation to promote retirement plan lifetime income options has been reintroduced by Representatives Donald Norcross (D-NJ) and Tim Walberg (R-MI). The Lifetime Income For Employees (LIFE) Act of 2022 would modify the qualified default investment arrangement rules under ERISA to allow annuity investments as part of a default in employer-provided 401(k) plans. The proposal is intended to provide employees with a steady guaranteed income during retirement and allow greater peace of mind that their income will last throughout retirement.