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Life Health > Health Insurance

Senate OKs Medicare Drug-Health Account Bill

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NU Online News Service, Nov. 25, 2003,11:03 a.m. EST – The Senate today voted 54-44 to approve the final version of H.R. 1, a bill that will create a Medicare drug program and a health savings account program for holders of high-deductible health insurance.[@@]

The House approved the bill Saturday by a 220-215 vote. Congress now will send the bill to President Bush, who lobbied hard for passage.

In the Senate, most supporters of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 were Republicans. Most opponents were Democrats. But 11 Democrats crossed party lines to vote for the bill, and nine Republicans crossed party lines to vote against it.

Two Democratic presidential candidates, Sen. John Kerry, D-Mass., and Sen. Joseph Lieberman, D-Conn., did not vote on the bill, which originally was sponsored by House Speaker Dennis Hastert, R-Batavia, Ill.

Starting in 2006, the prescription drug program section of the bill will create a prescription insurance plan for Medicare beneficiaries that will pay 75% of a beneficiary’s annual drug costs between $250 and $2,250 and 95% to 100% of annual drug costs over $3,600. The program is supposed to pay most of the out-of-pocket costs for the poorest Medicare beneficiaries.

The HSA section of H.R. 1 will let holders of individual health insurance with annual deductibles over $1,000 and holders of family health insurance with annual deductibles over $2,000 put enough cash into the HSAs to cover the cost of the deductible. H.R. 1 limits HSA contributions to $2,600 for individuals and $5,510 for families, according to an analysis by Davis & Harman L.L.P., Washington. Taxpayers between the ages of 55 and 65 can contribute more.

A portion of the bill which will become Section 233(c)(2)(c) of the Social Security Act creates a “safe harbor” provision for “high-deductible” plans that waive or reduce deductibles for normal preventive care. The provision means that a taxpayer who buys individual health insurance with a $1,000 deductible could start a $1,000 MSA even if the insurance policy pays 100% of the cost of checkups, mammograms and other preventive care.

Taxpayers can roll Archer MSA assets into HSAs.

A committee made up of members of the House and Senate hammered out the final version of the bill, or conference report, which eliminates the differences in the versions originally approved by the House and the Senate.

The final version of the bill leaves out a provision that would have let uninsured U.S. residents and U.S. residents with health insurance with deductibles as low as $500 set up health accounts called “Health Savings Security Accounts,” according to the joint explanatory statement.

The House has posted links to the explanatory statement and other information about the conference report at

Links to more information about the bill are available at


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