WASHINGTON (4/11/08)—The House Ways and Means Committee passed the Taxpayer Assistance and Simplification Act of 2008 this week, a measure could threaten credit union participation in Health Savings Accounts (HSAs), according to the Credit Union National Association (CUNA).
Although the bulk of the measure is not cause for concern for credit unions, John Hildreth, CUNA senior legislative representative, said Thursday that it contains a provision that "would be very detrimental to HSAs and would drive many credit unions out of this market."
This legislation would require the account provider to take on the role of verifying that each distribution is used for a qualified medical expense.
This, of course, would drive most credit unions and banks out of the HSA business and move it to plan administrators who are accustomed to substantiation from the services that they provide, like Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs).
He said the increased compliance burden would be detrimental to consumers because it would likely restrict the general availability of HSAs.
Also, Hildreth noted that if credit unions must track the validity of their members' HSA expenses, they are place in the awkward position of disputing with their members as to whether expenses may or may not be qualified.
The bill (H.R. 5719) passed the committee 24 to 17.
CUNA launched a significant lobbying effort against the HSA substantiation provisions prior to the committee's vote and won a two-year delay in the implementation of the provision.
Rep. Paul Ryan (R-Wisc.) offered an amendment to strike the substantiation clause from the tax bill, but lost that effort in a 25 to 15 vote. He had urged his colleagues not to let anecdotal evidence of abuses sway them to include the burdensome provision.
CUNA will continue its efforts to oppose the HSA provision as the bill makes its way to the House floor for a vote. There currently is no similar bill introduced in the Senate.
courtesy of cuna.org