House Sends $3.3T Tax Package, With HSA Provisions, to Trump

The Senate passed the package by a 51-50 vote Tuesday, with Vice President JD Vance casting a vote to break a tie.

President Donald Trump is expected to sign the package into law at 4 p.m. on Friday.

The package: The most widely discussed provision would renew many existing tax rules, such as the rules for federal estate taxes, and create some new tax breaks, such as tax breaks for tips and overtime pay.

The package would make more than $1.1 trillion in cuts over 10 years in federal spending on Medicaid, Medicare, Affordable Care Act individual health insurance premium tax credit subsidies and other federal health programs, according to the Committee for a Responsible Federal Budget. The cuts would amount to more than 10% of the original federal health program spending projections.

Democrats are predicting the changes will lead to 17 million people with Medicare, Medicaid or individual health coverage losing their health coverage.

The final version of the package excludes most of the health savings account and health reimbursement arrangement provisions that were in a version of the package passed by the House in May.

But the final version does include a provision that will let HSA owners use some of the HSA cash to pay for direct primary care practice memberships.

Workers with HSAs will be able to spend up to $150 per month for an individual and up to $300 per month for a family to pay direct primary care dues.

Direct primary care practices offer members easy access to preventive care and routine care in exchange for annual, quarterly or annual dues.

The final version of the OBBBA package also includes a provision letting workers and others use HSAs together with bronze-level coverage and catastrophic coverage, even if the annual out-of-pocket spending limits for bronze or catastrophic coverage exceed the normal out-of-pocket spending limits for the "high-deductible health plans" that are compatible with HSAs.

A third provision codifies an existing batch of Internal Revenue Service guidance that lets HSA-compatible high-deductible health plans cover telehealth services before HSA holders have met their deductibles.

Reactions: Reaction to House passage of the package from benefits, insurer and health care provider groups was mixed.

The Insured Retirement Institute and the ERISA Industry Committee welcomed passage of the package.

IRI noted that the package preserves tax deferral of retirement savings.

"Preserving the tax deferral of retirement savings is a win for retirement savers," said Wayne Chopus, chief executive officer of IRI.

ERIC noted that the package preserves the tax exclusion for employer-sponsored health benefits as well as retirement savings incentives.

"ERIC will continue building on the bill's foundational victories to deliver meaningful benefits changes for employees and their families, while guarding against efforts to weaken America's private health and retirement systems," ERIC CEO James Gelfand said.

The Council for Affordable Health Coverage welcomed inclusion of the HSA provisions.

"Now, thanks to Congress, millions more Americans will be able to contribute to their own HSAs and have more options on where and how they can use them, including for telehealth visits," the group said.

Chip Kahn, the CEO of the Federation of American Hospitals, blasted the Medicaid cuts, Medicare changes and Affordable Care Act premium subsidy changes in the package and predicted that implementation of the package would have a "devastating" effect on patients and health care providers.

"The health cuts passed by Congress today represent the largest cuts to care our country has ever seen," Kahn said. "Americans will feel the reverberations of this legislation in communities across the nation — whether directly due to a loss of coverage, the increase of their costs, or as doctors and hospitals scramble to sustain services and keep their doors open. Members of Congress will have to revisit this calamity to mitigate the effects on their constituents and communities."

America's Health Insurance Plans also reacted with dismay.

"Health plans will do everything they can to support people impacted by the substantial loss of coverage in Medicaid and the individual market, and to help keep access to quality care as affordable as possible," AHIP said. "With millions of Americans facing coverage disruptions in the years ahead, it is more important than ever to prevent the expiration of the current health care tax credits before the end of the year, and to continue to keep the promise to protect Medicare beneficiaries."

The American Benefits Council welcomed the inclusion of the HSA provisions and emphasized that it believes that benefit plans could have faced serious negative consequences.

There was a real threat to tax deferral for individual contributions to workplace retirement plans, the council said.

The council "stayed in very close contact with congressional staff as the bill advanced through the legislative process to ensure that these important incentives remained not at risk, to support efforts to keep these issues as bipartisan as possible, and to provide technical expertise on provisions with potential impact on plan sponsors," the council said.

"Employer plan sponsors are relieved that lawmakers wisely avoided disastrous changes to the tax incentives for employer-provided health and retirement plans," Katy Johnson, the president of the council, said.

The Committee for a Responsible Federal Budget predicted the current version of the package could really increase the national debt by $4.1 trillion by 2034, not just $3.3 trillion.

"Our fiscal condition is currently precarious, with debt-to-GDP soaring towards an all-time record, interest costs surging past nearly all other parts of the budget, and the Social Security and Medicare trust funds heading towards insolvency," the committee said. "This bill, which has been described by champions as 'a start' toward fiscal sustainability, would in fact make every single one of these problems worse — in some cases, dramatically worse."

The future: One question is how implementation of the Medicaid, Medicare and Affordable Care Act individual health insurance premium tax subsidy provisions will really work.

In the past, Congress has handled some controversial laws, such as tough Medicare funding restriction laws, by postponing implementation year after year.

(Adobe Stock)