HSA Modernization Act

This bill significantly modernizes Health Savings Accounts (HSAs) by expanding eligibility and increasing contribution limits. It allows individuals entitled to Medicare Part A by reason of age , certain veterans without service-connected disabilities, and those receiving assistance from the Indian Health Service to contribute to HSAs, removing previous disqualifications. The legislation broadens the types of health plans that qualify for HSA eligibility, specifically including Bronze and Catastrophic plans under the Affordable Care Act as high deductible health plans. It also establishes a safe harbor , allowing plans to omit a deductible for the first $500 of mental health benefits without losing their high deductible status. Furthermore, the bill increases the maximum HSA contribution limit for both self-only and family coverage to match the deductible and out-of-pocket limits of high deductible health plans. It also permits medical expenses incurred up to 60 days before an HSA is established to be considered qualified, provided coverage under a high deductible plan has begun. Finally, the bill clarifies that distributions for qualified long-term care services are considered qualified medical expenses. It also revises rules for married individuals with family coverage, enabling both spouses to make catch-up contributions if both are over age 55, thereby enhancing flexibility for older account holders.