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Senators Defeat HSA Health Premium Proposal

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Members of the Senate voted 47-48 Thursday against permitting consumers to use health savings account assets to pay for individual high-deductible health insurance policies.

Senators were voting on an effort to add an HSA premium amendment to the Senate’s version of H.R. 2, the minimum wage increase bill, rather than on a stand-alone HSA bill.

Many Senate Democrats have been trying to ease passage of the minimum wage increase bill by opposing efforts to expand the bill by adding tax cut provisions or other provisions.

The version of H.R. 2 that came out of the Senate Finance Committee already includes a package of tax cuts, along with provisions that could sharply restrict use of non-qualified deferred compensation plans.

Senators blocked Thursday several other suggested additions to the bill by voting to kill some amendments, then immediately approving “sense of the Senate” resolutions supporting the intent of the authors of the amendments.

One sense-of-the-Senate resolution supports canceling the 1993 income tax increase on Social Security benefits, and the other supports the idea that the Senate should makes various educated-related incentives permanent.

The Senate did not pass a resolution supporting the goal of permitting consumers to use HSA assets to buy high-deductible health coverage.

Sen. Edward Kennedy, D-Mass., spoke out against the proposed amendment, which was introduced by Sen. John Ensign, R-Nev.

“This amendment does nothing to help working families, especially those who earn the minimum wage,” Kennedy said, according to a written version of his remarks. “It’s a travesty that we’re debating more tax breaks for the wealthy who use health savings accounts as another way to shelter income when we should be talking about a long overdue pay increase for working families.”

A family earning $120,000 a year would get a $1,667 tax break for contributing the $5,450 maximum to an HSA, but a family earning $20,000 a year that managed to make the maximum HSA contribution would see no reduction in its tax bill, Kennedy said.


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