House Tax Package Could Allow for FSA-to-HSA Rollovers

By Allison Bell | Originally posted on ThinkAdvisor

The new House Ways and Means Committee tax package includes many provisions related to health savings accounts, health reimbursement arrangements and flexible spending arrangements.

One could let clients who are closing out employer-sponsored HRAs or FSAs roll the unused cash into HSAs.

Another could let one spouse in a couple contribute to an HSA even though the other spouse is contributing to an FSA.

The provisions are part of what Ways and Means has dubbed "The One, Big, Beautiful Bill," which includes a wide range of income tax provisions, public health care provisions, and other provisions.

What it means: Financial professionals who have clients with HSAs need to pay close attention to The One, Big, Beautiful Bill.

The backdrop: The House Ways and Means Committee is "marking up" — debating and, possibly, amending on voting on — the package now. The committee is streaming the markup live online and will post a video recording when the meeting is over.

The text of the bill is available here.

The committee has also posted a detailed section-by-section summary.

The fate of the package is unclear. Some House Republicans have argued that Congress should stop cramming ideas into huge, "must pass" budget and spending bills and ought to consider proposals one at a time, in ordinary bills.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, is not a fan.

"The sheer number of expensive and unpaid for new tax breaks in this bill, all with various phaseouts and complex rules, is a tax accountant's dream and a budgetary nightmare," MacGuineas said in a statement about the package.

Whatever happens to the package, some provisions could move ahead in whatever tax or budget legislation does get through Congress, and other provisions could pass as stand-alone bills.

The HSA account provisions: Each of the sections in the House Ways and Means package has a number.

The HSA provisions are in sections 110204 through 110213.