Ways and Means advances health legislation

Tax Hot Topics newsletter The House Ways and Means advanced a package of bills on Wednesday that tax nicotine used in e-cigarettes and expand access to inhalers, over-the-counter menstrual products and health savings accounts (HSAs).

The legislation comprises the four bills described below:

  • H.R. 4742 would extend excise taxes for cigars, cigarettes and other tobacco products to cover vaping by imposing a proportional, $50.33 tax per 1,810 milligrams of nicotine that has been extracted, concentrated or synthesized. The bill provides an exception for such “taxable nicotine” if the IRS determines it will be used in a product approved for sale by the Food and Drug Administration as a nicotine replacement therapy.
  • The Inhaler Coverage and Access Now (I CAN) Act (H.R. 4716) would treat inhalers and related drugs or medicines as preventive care for high-deductible health plans (HDHPs) tied to health savings accounts so that they could be covered before the deductible is reached.
  • The Restoring Access to Medication Act of 2019 (H.R. 1922) would allow taxpayers to use HSAs, Archer Medical Savings Accounts, Flexible Spending Arrangements and Health Reimbursement Arrangements to purchase menstrual care products as medical care. Eligible products include tampons, pads, liners, cups, sponges, or similar products used for menstrual care or other genital secretions.
  • The Primary Care Enhancement Act of 2019 (H.R. 3708) would repeal a prohibition on taxpayers with direct primary care service arrangements (DPCA) from contributing to an HSA but provides some limitations. Aggregate fees for the DPCA cannot exceed $150 per month adjusted for inflation (or double that amount if more than one individual is covered). In addition, primary care services cannot include procedures requiring general anesthesia, prescription drugs (other than vaccines) or lab services not typically administered in an ambulatory primary care setting.

The last three bills were approved unanimously, but the vote for H.R. 4742 was split along party lines. Republicans objected to the speed with which the bill was brought up in committee for markup. It was introduced on Oct. 18.

In his opening remarks, Ranking Minority Member Kevin Brady (R-Texas) acknowledged the need to address the potential dangers associated with e-cigarettes but contended that lawmakers were not provided an opportunity to conduct proper due diligence before being asked to vote on a new tax. The bill is expected to raise $10 billion over 10 years, according to an estimate from the Joint Committee on Taxation.

All four bills are expected to get votes on the House floor, although their prospects in the Senate remain uncertain.

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

Omair Taher
Senior Associate
Washington National Tax Office
T +1 202 861 4143

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