To amend the Internal Revenue Code of 1986 to reform certain rules related to health savings accounts.
Summary
H.R. 6183 aims to amend the Internal Revenue Code of 1986, focusing on reforming rules related to health savings accounts (HSAs). The bill introduces several changes, including repealing an exception for penalty-free distributions, implementing income limitations on deductible contributions, and limiting the reimbursement timeframe for medical expenses. It also mandates substantiation for HSA distributions and imposes an excise tax on excessive HSA fees.
Expected Effects
The bill will likely result in more stringent requirements for HSA usage and increased oversight of HSA fees. It could affect individuals' ability to deduct HSA contributions based on income and how they use HSA funds for medical expenses. The changes aim to ensure appropriate use of HSAs and prevent abuse.
Potential Benefits
- Increased transparency in HSA fees through required reporting.
- Prevents use of HSA funds for non-essential expenses like spa treatments.
- Limits on reimbursement timeframe ensures timely claims and reduces potential for fraud.
- May encourage more responsible use of HSA funds for qualified medical expenses.
- Could lead to fairer distribution of tax benefits associated with HSAs.
Most Benefited Areas:
Potential Disadvantages
- Income limitations on deductible contributions may disproportionately affect middle-income individuals.
- Stricter substantiation requirements could create administrative burdens for HSA holders.
- Limiting reimbursements to two years may create challenges for those with long-term medical needs.
- Excise tax on excessive fees could increase costs for HSA trustees, potentially passed on to account holders.
- Reduced flexibility in using HSA funds due to restrictions on certain expenses.
Constitutional Alignment
The bill primarily deals with taxation and regulation of health savings accounts, falling under the purview of Congress's power to lay and collect taxes as outlined in Article I, Section 8 of the Constitution. The specific provisions related to income limitations, substantiation requirements, and excise taxes are within the scope of Congress's authority to regulate commerce and provide for the general welfare. There are no apparent conflicts with individual rights or freedoms protected by the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).