BIG “I” LAUDS BUSH SIGNING OF HEALTH SAVINGS ACCOUNT BILL
Improvements will help increase usage of HSA plans
WASHINGTON, D.C., Dec. 20, 2006—The Independent Insurance Agents & Brokers of America (the Big “I”) celebrated the holidays with an important victory, as President George W. Bush signed H.R. 6111, the Tax Relief and Health Care Act of 2006, into law today.
In one of the last acts of the 109th Congress, the Senate and House both passed H.R. 6111 before adjourning. The bill, sponsored by outgoing House Ways & Means Committee Chairman Bill Thomas (R-Calif.), included a number of provisions that will improve the operations of Health Savings Account (HSA) plans. The reforms are expected to help increase usage of these plans among small business owners, self-employed individuals, and workers who currently do not receive health care coverage on the job.
“Passage of this bill is an important win for insurance consumers,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “We strongly support improvements to health savings accounts, to provide more options for individuals and families to cover their medical expenses, and we appreciate President Bush signing it into law. We are grateful that Congress made a point of passing this important legislation before finishing its work for the year, and we thank Chairman Thomas for his leadership on this issue, as well as his longtime service in Congress.”
The bill’s provisions include the following:
1) It allows HSAs to be funded with one-time transfers from Individual Retirement Accounts (IRAs), enabling individuals to benefit from the tax advantages provided by HSAs when paying for medical expenses.
2) It allows individuals to make the maximum annual contribution to HSAs at any point in a given year; previously, they were only allowed to make prorated contributions based on their enrollment dates.
3) It allows individuals to contribute amounts that equal the annual contribution limit, regardless of their plans’ deductible limits; previously, they were only allowed to contribute amounts equaling their deductibles.
4) It allows funding for HSAs to come from a health reimbursement arrangement (HRA) or a flexible spending account (FSA) in the form of a one-time rollover.
5) It allows employees with lesser earnings to receive higher contributions from their employers into HSAs.
HSA funding is tax-deductible, tax-deferred while growing and available for tax-free usage for medical expenses. Annual contributions in 2007 are capped at $2,850 per individual and $5,650 per family.
“This important legislation will expand health coverage options for many Americans,” says Tom Koonce, Big “I” assistant vice president for federal government affairs. “We appreciate the fact that the President and the Congress made a point of enacting this vital legislation before adjourning, and our members are very pleased this important law is on the books.”
Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.