House advances healthcare-related tax legislation

Tax Hot Topics newsletterThe House of Representatives passed a series of healthcare-related tax bills this week. Among the more notable are a trio of bills that take aim at taxes enacted by the Affordable Care Act and expand potential usage of health savings accounts (HSAs).

The Protect Medical Innovation Act of 2017, which permanently repeals the already suspended medical device excise tax, passed 283-132, with 57 Democrats joining all but nine Republicans. H.R. 6311, the Increasing Access to Lower Premiums and Expanding Health Savings Accounts Act of 2018 extends the moratorium on the health insurance tax through 2021 and doubles contribution limits for HSAs. Finally, H.R. 6199, the Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018 picks up where the latter left off, allowing HSAs to be used for a much broader range of healthcare products and services by repealing provisions of the Internal Revenue Code which limit payments from HSAs to prescriptions only. The last two passed by thinner margins along more partisan lines, 242-176 and 277-142 respectively.

The lower chamber also passed by voice vote H.R. 1201, the Equitable Access to Care and Health Act, which expands the religious exemption from the ACA’s individual mandate, and H.R. 1476, the Native American Health Savings Improvement Act, which allows individuals who receive care from the Indian Health Service or a tribal organization to contribute to a HSA. Not included in this round of legislation was repeal of the so-called “Cadillac Tax,” presently suspended until 2022, but it is unlikely to be implemented even then.

While there is some support for these provisions on both sides of the aisle and opportunity for bipartisan action this year, the politically charged nature of healthcare legislation, coupled with what is already shaping up to be a contentious midterm election, makes enactment an uphill battle. Further diminishing any appetite for action is the fact that the combined legislation contains no revenue offsets, adding more than $40 billion to the deficit over 10 years, according to estimates by the Joint Committee on Taxation.

Dustin Stamper
Director, Washington National Tax Office
T +1 202 861 4144

Shamik Trivedi
Senior Manager, Washington National Tax Office
T +1 202 521 1511

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