Even before 2012 presidential candidate Mitt Romney announced that Rep. Paul Ryan of Wisconsin will be his running mate for the upcoming November 6 elections, Rep. Ryan was a strong believer in Health Savings Accounts. If not for Rep. Ryan’s leadership on Consumer Directed Health Plans (CDHPs), you might not be enjoying some of the benefits currently offered by HSA plans.
Back in 2006, Rep. Paul Ryan and Rep. Eric Cantor created a bill that expands the benefits of Health Savings Accounts. They both enhanced the bill so that people can use Health Savings Accounts to save on taxes and to save money to pay for future health care costs. When H.B. 6134 was signed into law, it made Health Savings Accounts appealing. That is one of reasons that HSA enrollment rates continue to rise every year. In 2012, HSA enrollees number 13.5 million. That’s an 18 percent increase from the enrollment rate seen in January 2011, which was 11.4 million.
Contributions. If not for the Cantor-Ryan bill, maximum HSA contributions would still be based on a health insurance plan’s annual deductible and not on the statutory index set by the law. It paved the way for people to contribute more to an HSA and save more on taxes. For 2012, the amount an individual can contribute to an HSA is $3,100, and the maximum contribution for a family HSA is $6,250.
Funds. The bill also allowed unused HSA funds to be rolled over from year to year just like IRA funds. That’s in contrast to Flexible Spending Accounts (FSAs), in which any unused balance is forfeited at the end of each year. Now that HSA balances roll over year after year, you can let your savings grow with tax-free earnings to help you pay for coming qualified health care costs. The bill also paved the way for IRA funds to be transferred to Health Savings Accounts without incurring any penalties. You can only make an IRA-HSA fund transfer once, though.