HSA Reform: Income Limits, Penalty Changes, and Stricter Expense Rules
This bill significantly reforms HSA rules, primarily by limiting tax benefits for high-income earners and tightening requirements for qualified expenses. Citizens must adhere to a new two-year deadline for expense reimbursement, and the exception allowing penalty-free non-medical withdrawals after age 65 is repealed. The legislation also introduces measures to curb excessive administrative fees.
Key points
An income limit (e.g., $300,000 for joint filers) is imposed on deductible HSA contributions, restricting tax benefits for high earners.
The exception allowing penalty-free distributions for non-medical expenses after age 65 is repealed.
A two-year maximum deadline is established for reimbursing medical expenses from an HSA (starting from the date the expense was paid).
A tax is imposed on excessive fees charged by HSA administrators, and greater transparency in reporting account earnings is required.
Spa treatments, beauty treatments, and expensive exercise equipment (over $500 annually) are excluded from qualified HSA medical expenses.
Introduced
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