Would the Presidents Tax Reform Commission Wipe Out HSAs?
The picture emerging from the president’s tax reform commission suggests that its leading tax reform proposal would eliminate health savings accounts. The commission will soon unveil a number of proposals for reforming the federal tax code. The details that have been reported (subscription required), though, suggest the leading proposal would eliminate the tax parity that HSAs create between (1) employer-sponsored health benefits and (2) health savings and out-of-pocket expenditures. According to reports, the leading proposal (the “simplified income tax”) would: • Cap the currently unlimited tax exclusion for employer-sponsored insurance at $5,000 for single taxpayers and $11,500 for families (indexed for inflation). • Create what Tax Notes describes as “an equivalent tax break for individual policies” for those without employer-sponsored insurance. • Roll health savings accounts (HSAs) and other tax-preferred savings vehicles into a “save for family account” (let’s call them SFFAs). U
