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house Bill H.R. 2163

Should People Be Able to Use Health Savings Account Funds for Expenses While on Family Leave?

Argument in favor

While workers should be able to take leave from their jobs for births, adoptions, or family members’ illness, paid family leave shouldn’t rely on new taxes or federal mandates that burden employers. Since families already use health savings accounts (HSAs) to save for healthcare expenses, it makes sense to broaden access to HSAs and allow funds to be used as a saving mechanism for paid leave.

Hillary's Opinion
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09/14/2019
1. Medical related needs are medical expenses! 2. Universal healthcare NOW- Medicare for all. When we ALL pool our resources we ALL do better. Healthy young people paying forward to help save for when they are old and need more medical care.
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09/14/2019
It’s their money to begin with and they should be able to use it for medical related expenses and if you’re on leave for a medical condition that would qualify, even if it’s just to pay the rent. Although a better option would be to have affordable healthcare available to everyone.
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Raymond 's Opinion
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09/14/2019
I have never understood why our Government seems to think they always knows what’s best for us and Society. Government should stop and stay out of people’s lives and stop telling people how they should run their lives. 99% of our problems today is due to government intervention. Them telling us they know what’s best for us. Think about that for awhile. Smaller government is good. Big government is VERY VERY BAD.
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Argument opposed

Health savings accounts (HSAs), while useful for middle- and higher-income earners, aren’t particularly useful for lower-income earners (who are also the most likely to not have paid family leave policies at their employers) as they have less money to save in an HSA. The federal government should fund a paid leave program of its own instead of broadening the uses of HSAs.

jimK's Opinion
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09/14/2019
All this legislation does is to release employer's from having to support legitimate paid medical leave to care for ill family members. All the flowery political doublespeak sounds good until you peel back the petals. This could certainly aid people employed by some of the alternative, kind of illegal, employer cost cutting practices of making everyone a contract employee- but that I a separate problem. Legislating this option, making it available to all employers (large and small) only pushes what should be employer paid leave onto individuals to pay from their health care savings accounts.
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Ann's Opinion
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09/14/2019
A typical Republican bill to make it sound good but in reality it benefits wealthy employers and higher paid individuals the most. It does almost nothing for most middle class and nothing for the poor. It’s another ridiculous ploy!!
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William 's Opinion
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09/14/2019
Needing time off from work to care for a newborn or family member is just one part of life that this country ignores. This is not the way to fix it. HSA accounts were designed to save for increasing healthcare costs as one ages. When young, you don’t spend it all, it “goes with you” should you change jobs and it doesn’t expire. So later in life when the costly health issues of aging arise, you will have a fund to help. It is used now largely by the middle and above folks. But if it were company funded like Whole Foods and the State of Indiana do, it could benefit all and drive down healthcare costs. Those two have seen upwards of 75% savings. In short, fix the problem. Leave the HSA alone to fulfill its promise.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Ways and Means
    IntroducedApril 9th, 2019

What is House Bill H.R. 2163?

This bill — the Freedom for Families Act — would allow individuals to use health savings accounts (HSAs) to cover expenses while on leave following a birth, adoption or family member's illness. Under this bill, people who are qualified for federally-mandated leave, unpaid leave, or who are currently unemployed could use HSA funds to pay for their leave.

To help more people access HSAs and save more money in them, this bill would expand HSA eligibility by removing the requirement of enrollment in a high-deductible health plan to enroll in HSAs, and increase the annual limit on contributions to these accounts to $9,000 for individuals and $18,000 for joint filers. Additionally, it would allow employers to make pre-tax contributions into employee accounts for the purposes of paid leave. 

Impact

Individuals; families; workers taking leave after a birth, adoption, or family member’s illness; employers; and HSAs.

Cost of House Bill H.R. 2163

A CBO cost estimate is unavailable.

More Information

In-DepthHouse Freedom Caucus chairman Rep. Andy Biggs (R-AZ) introduced this bill to allow families to use funds in health savings accounts (HSAs) to pay expenses during a period of leave for a child’s birth or adoption or a family illness

“Families already use health savings accounts to save for healthcare expenses. There is no reason why families should not have the freedom to access those funds to pay expenses during family leave for a child’s birth, adoption, or a family illness. This proposal provides financial security for families during family leave without new taxes or new federal burdens on employers. I encourage my colleagues to join me in supporting this free-market solution to empower American families to control their own savings and leave.”

Rep. Biggs’ intention is for this proposal to serve as an alternative to federally-mandated paid family leave. He expounded on this idea in a letter to his Congressional colleagues seeking cosponsors for this legislation: 

“There is no reason these funds should not be available for families that have HSAs. Whether you qualify for leave under the Family and Medical Leave Act, take other unpaid leave offered by an employer, or are not currently employed, you will be able to use any available funds in your HSA to pay expenses while caring for a new child or a sick loved one. The portability of HSAs will allow Americans the freedom to carry funds for family leave from one job to the next and accumulate funds over multiple years. By removing the requirement of a high deductible health plan, this bill makes HSAs, and savings for family leave, available to all Americans. This bill also raises the contribution limits on HSAs so that individuals, families, and employers can contribute meaningful amounts each year… This bill will empower employers to offer funds for paid family leave to their employees without onerous, one-size-fits-all federal mandates.  With most current proposals for paid family leave requiring higher taxes, federal mandates, or borrowing from Social Security, this bill offers a unique option for families. The solution to paid family leave is to give families a variety of options and HSAs should be among those options. ”

In the same letter, Rep. Biggs also argued that this proposal has seven key advantages over other paid family leave proposals: 

  1. No minimum period of employment to qualify
  2. No application process – funds immediately available for use
  3. No borrowing against Social Security or other retirement funds
  4. No requirement to pay back funds that are spent
  5. Fully voluntary
  6. Fully customizable to the needs of families and employers
  7. The individual, family members, or employers may contribute funds

Americans for Tax Reform (ATR) supports this bill. It argues that using HSA funds to pay for leave has several advantages, including portability (individuals can carry HSA funds from one job to another without losing accrued benefits); lack of a minimum employment period for using such funds; customizability; ability to accept contributions from the account holder, family members, and businesses; and non-interference with retirement. With these and other benefits in mind, ATR concludes

“Instead of embracing a top-down, one-size-fits-all approach to paid family leave that would impose onerous costs and federal mandates on American businesses, the Freedom for Families Act empowers families to control their savings and leave.”

Jonathan Bydlak, founder and president of the Coalition to Reduce Spending, argues that HSAs are an “essential piece” of solving the United States’ healthcare crisis: 

“HSAs are an essential piece of the puzzle that is solving the country's growing health care crisis and are a foil to the government-centric efforts like Medicare for All or even some Republican-led plans that would create new entitlements for paid family leave. By contrast, expanding HSAs allows people to save for what they want, such as Rep. Andy Biggs' recently filed Freedom for Families Act, without burdening an already strained system with more mandates.”

The American Enterprise Institute (AEI) has a favorable view of the idea of increasing HSA flexibility, but notes that HSAs are “tilted towards higher income employees.” The high-income skew of HSAs is evidenced by the fact that, according to a survey by the Kaiser Family Foundation and the L.A. Times, fewer than 22% of those with incomes under $75,000 have more than $2,000 in an HSA

With this in mind, the AEI theorizes that this bill would help most middle- and upper-income families self-finance large portions of their paid parental leaves, but wouldn’t necessarily be of use to lower-income households who might not be able to save. Thus, AEI concludes that it’s unclear how many low-income families would benefit from this bill. 

To make more flexible HSA policies more useful to lower-income families, AEI proposes a companion policy helping working class families get enough money to save in HSAs. To this point, in a 2018 AEI-Brookings report, Douglas Holtz-Eakin and Ben Gitis proposed savings accounts funded by not only employees, but also employers and the government. These accounts could be tied to the employee, portable, and give low-wage workers some funds to meet their medical and parental needs.

President Trump’s 2020 budget proposal calls for six weeks of paid parental leave. Additionally, a handful of states already have state laws requiring paid family leave programs.

This legislation has 20 Republican cosponsors. It’s supported by Americans for Tax Reform (ATR), Independent Women’s Voice (IWV)


Of NoteUsed alongside low-premium, high-deductible health insurance plans, health savings accounts (HSAs) can allow families to spend their own money on their own health needs. Since their creation 16 years ago, HSAs have become a popular vehicle for promoting patient choice. Today, about 25 million American families and individuals use HSAs. 

Currently, the U.S. is the only industrialized nation without a national paid family leave program. Only 17% of workers overall have paid leave from their employers; and only 6% of low-income workers have paid family leave benefits.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / yacobchuk)

AKA

Freedom for Families Act

Official Title

To amend the Internal Revenue Code of 1986 to allow for tax-advantaged distributions from health savings accounts during family or medical leave, and for other purposes.

    1. Medical related needs are medical expenses! 2. Universal healthcare NOW- Medicare for all. When we ALL pool our resources we ALL do better. Healthy young people paying forward to help save for when they are old and need more medical care.
    Like (26)
    Follow
    Share
    All this legislation does is to release employer's from having to support legitimate paid medical leave to care for ill family members. All the flowery political doublespeak sounds good until you peel back the petals. This could certainly aid people employed by some of the alternative, kind of illegal, employer cost cutting practices of making everyone a contract employee- but that I a separate problem. Legislating this option, making it available to all employers (large and small) only pushes what should be employer paid leave onto individuals to pay from their health care savings accounts.
    Like (56)
    Follow
    Share
    A typical Republican bill to make it sound good but in reality it benefits wealthy employers and higher paid individuals the most. It does almost nothing for most middle class and nothing for the poor. It’s another ridiculous ploy!!
    Like (34)
    Follow
    Share
    Paid family leave.
    Like (30)
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    Needing time off from work to care for a newborn or family member is just one part of life that this country ignores. This is not the way to fix it. HSA accounts were designed to save for increasing healthcare costs as one ages. When young, you don’t spend it all, it “goes with you” should you change jobs and it doesn’t expire. So later in life when the costly health issues of aging arise, you will have a fund to help. It is used now largely by the middle and above folks. But if it were company funded like Whole Foods and the State of Indiana do, it could benefit all and drive down healthcare costs. Those two have seen upwards of 75% savings. In short, fix the problem. Leave the HSA alone to fulfill its promise.
    Like (23)
    Follow
    Share
    We must come together as a NATION and support our families FULLY, if we are going to be able to grow into the future. Individuals and families CANNOT DO THIS ON THEIR OWN. Face it, most of us aren’t republican senators who get slush funds from Russia and the NRA. Families need federal support, plain and simple.
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    Another Repugnant idea that benefits the wealthier families. Thy just never stop trying to keep the wealthy happy, do they?
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    Being able to use funds from Health-savings accounts for family leave is really only a privilege that the wealthy will be able to have since they can afford to put more money into these accounts! We need to mandate paid family leave!
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    Just one more way for employers to screw employees.
    Like (14)
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    It’s a Health Savings Account, not an unemployment account. Why not extend Unemployment Benefits to family leave? The employer and employee have contributed to unemployment funds: directly by the employer and indirectly by the employee through lower pay.
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    I don’t think this is how health savings accounts are intended to be used? 🤷‍♀️
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    A typical Republican Bill. This legislation is designed for the wealthy with no thought for those less well off. Most middle and low income families cannot afford to fund HSA’s and may not even have access to them. The United States does not value it’s citizens and it’s policies reflect that as opposed to the civilized world.
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    Pass a paid medical leave act for all families. This bill would only benefit the upper echelons.
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    If families are a priority, we should walk the talk and provide all mothers paid leave for the birth of a child and mothers and fathers paid leave to bond with a child following, birth, fostering or adoption. The pay and leave time should not be dependent on the employer, but a set minimum standard for all. 12 weeks of unpaid leave is insufficient and negatively impacts low income earners. It is an unfair choice to require a new mom to elect whether to stay home with a child and receive no pay or return to work to put food on the table and pay rent. Federal and state officials should lead by example and adopt paid leave to support families and family values for government employees and contractors.
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    If you want the tax protected status for HSA funds then use them for that specified purpose. Don’t keep adding things to the list for every possible occurrence.
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    Paid family leave, that does not leave the family vulnerable for unexpected medical expenses either during the leave or after, makes far better sense.
    Like (7)
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    HSA’s should be used for hospital and doctors charges. Just because they are on paid family vacation should this HSA’s be used to take his wife out to dinner or to go to a movie?
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    👎🏻👎🏻 HSA’s Are For Medical Expenses NOT Living Expenses 👎🏻👎🏻 Health savings accounts (HSAs), while useful for middle- and higher-income earners, aren’t particularly useful for lower-income earners (who are also the most likely to not have paid family leave policies at their employers) as they have less money to save in an HSA. The federal government should fund a paid leave program of its own instead of broadening the uses of HSAs. SneakyPete..... 👎🏻👎🏻👎🏻👎🏻👎🏻. 9.14.19.....
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    It’s their money to begin with and they should be able to use it for medical related expenses and if you’re on leave for a medical condition that would qualify, even if it’s just to pay the rent. Although a better option would be to have affordable healthcare available to everyone.
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    Only for medical expenses. That it what it is for.
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