Today, the U.S. House of Representatives passed H.R. 5719, the “Taxpayer Assistance and Simplification Act,” which included a provision requiring substantiation of withdrawals from HSAs, as was approved by the Ways & Means Committee last week. Officially, the vote on final passage of the bill was 238-179. However, the floor debate was much more interesting.
The House Rules Committee, which determines whether and which amendments are permitted, allowed no amendments for this bill. As a result, those opposed to the bill had only one option to pursue – a “motion to recommit,” which is a vote to send the bill back to the Ways & Means Committee for re-consideration. At the end of the 15 minutes allotted for the vote on this motion, the opposition had the majority of votes. However, the Democratic Leadership allowed the time for voting to be extended until enough votes were rounded up to make the vote a tie – 210 to 210. This is not a rare occurrence — votes are held open all the time until the Leadership gets the result they want by pressuring Members to change their vote or by waiting for a non-voting Member to get to the House Chamber. However, because the vote resulted in a tie, the motion failed. One Member, Rep. Westmoreland (R-GA) attempted to challenge the Chair that House Rule 20 was violated because the vote was held open until its outcome was changed, but his efforts failed.
On the motion to recommit, 21 House Democrats voted to send the bill back to Committee (good). Unfortunately, three Republicans voted against the motion to recommit (bad). After the motion to recommit failed, the bill was then voted on for final passage. Again, the final vote was 238 – 179.
It important to remember that the President has threatened to veto this bill over the HSA provision in H.R. 5719. This means that the bill, if vetoed, will not become law, since any effort to override the President’s veto will fail in the House. A copy of the White House letter opposing the bill is attached. Remember, the bill also must pass the Senate, and then go to conference, and the HSA substantiation provision must survive all of that for it then to be vetoed.
Thank you for all your efforts to contact Members of Congress about this issue. This has been a useful exercise in fighting this legislation, as it shows what we must do to be effective on the Hill. We hope the 21 Democrats who voted to send the bill back to the Ways & Means Committee is the result of your efforts to educate Members on this issue.
Tell me, Oh Great Ones, how I should understand this story.
Is the idea that I should be able to charge anything I personally deem health-care related (like bathing in the Dead See or R&R in Hawaii) as a health-care expenditure entitled to tax-deductibility (i.e., a Federal tax subsidy, in effect)?
If you vacation in Hawaii and pay by credit card and then pay your credit card bill with a check and then deduct the whole affair as a business expense, it is not the job of your credit card company or your bank to prevent you from wrongfully taking the deduction or to verify the tax legitimacy of any other transaction of yours. Same principle should apply to HSAs.
Dr. Reinhardt,
If you do use your HSA funds as you suggest, you will probably be liable for income tax and penalties on the amount withdrawn unless you can convince the IRS bean counters that these expenses were truly medical expenses (NOTE: they are a conservative lot). However, if you have already incurred $5,000 worth of IRS-qualified medical expenses and you now choose to reimburse yourself and spend the $5,000 on your favorite leisure activity, there is nothing untoward being subsidized.
Boy, it’s nice to be vindicated. I’ve been saying for years now that the first priority is to grow market share so that politicians will not be able to take HSAs and other forms of Consumer Driven Health away. That theory was tested last week in the brou-ha-ha over HSA substantiation.
While the bill passed the House, it also came only one vote shy of being “recommitted” to the Ways & Means Committee. And it is unlikely to survive in the Senate.
Most importantly, this was a test run for future challenges. Most of the HSA vendors have never in the past been very politically active. They’ve been trying to start and then grow their businesses. But this time, they were called upon to do more and many of them responded by contacting their clients to write letters and make phone calls.
Because HSAs now have decent market penetration, there is a lot at stake in ensuring the survival of the product, and there are resources that can be tapped into.
Plus, there are serious advocates in Washington with political savvy who can now mobilize the “HSA community” and have the communications tools to do it effectively. Prominent among these are Dan Perrin of the HSA Coalition, Roy Ramthun, and Brian McManus of the Health Care Freedom Coalition.
Congratulations to all who participated in this effort. We are building a tiger.
Today, the U.S. House of Representatives passed H.R. 5719, the “Taxpayer Assistance and Simplification Act,” which included a provision requiring substantiation of withdrawals from HSAs, as was approved by the Ways & Means Committee last week. Officially, the vote on final passage of the bill was 238-179. However, the floor debate was much more interesting.
The House Rules Committee, which determines whether and which amendments are permitted, allowed no amendments for this bill. As a result, those opposed to the bill had only one option to pursue – a “motion to recommit,” which is a vote to send the bill back to the Ways & Means Committee for re-consideration. At the end of the 15 minutes allotted for the vote on this motion, the opposition had the majority of votes. However, the Democratic Leadership allowed the time for voting to be extended until enough votes were rounded up to make the vote a tie – 210 to 210. This is not a rare occurrence — votes are held open all the time until the Leadership gets the result they want by pressuring Members to change their vote or by waiting for a non-voting Member to get to the House Chamber. However, because the vote resulted in a tie, the motion failed. One Member, Rep. Westmoreland (R-GA) attempted to challenge the Chair that House Rule 20 was violated because the vote was held open until its outcome was changed, but his efforts failed.
On the motion to recommit, 21 House Democrats voted to send the bill back to Committee (good). Unfortunately, three Republicans voted against the motion to recommit (bad). After the motion to recommit failed, the bill was then voted on for final passage. Again, the final vote was 238 – 179.
It important to remember that the President has threatened to veto this bill over the HSA provision in H.R. 5719. This means that the bill, if vetoed, will not become law, since any effort to override the President’s veto will fail in the House. A copy of the White House letter opposing the bill is attached. Remember, the bill also must pass the Senate, and then go to conference, and the HSA substantiation provision must survive all of that for it then to be vetoed.
Thank you for all your efforts to contact Members of Congress about this issue. This has been a useful exercise in fighting this legislation, as it shows what we must do to be effective on the Hill. We hope the 21 Democrats who voted to send the bill back to the Ways & Means Committee is the result of your efforts to educate Members on this issue.
Tell me, Oh Great Ones, how I should understand this story.
Is the idea that I should be able to charge anything I personally deem health-care related (like bathing in the Dead See or R&R in Hawaii) as a health-care expenditure entitled to tax-deductibility (i.e., a Federal tax subsidy, in effect)?
For story see: http://www.businessinsurance.com/cgi-bin/news.pl?post_date=2008-04-15&id=12725
Okay. Here goes.
If you vacation in Hawaii and pay by credit card and then pay your credit card bill with a check and then deduct the whole affair as a business expense, it is not the job of your credit card company or your bank to prevent you from wrongfully taking the deduction or to verify the tax legitimacy of any other transaction of yours. Same principle should apply to HSAs.
Got it?
Dr. Reinhardt,
If you do use your HSA funds as you suggest, you will probably be liable for income tax and penalties on the amount withdrawn unless you can convince the IRS bean counters that these expenses were truly medical expenses (NOTE: they are a conservative lot). However, if you have already incurred $5,000 worth of IRS-qualified medical expenses and you now choose to reimburse yourself and spend the $5,000 on your favorite leisure activity, there is nothing untoward being subsidized.
Boy, it’s nice to be vindicated. I’ve been saying for years now that the first priority is to grow market share so that politicians will not be able to take HSAs and other forms of Consumer Driven Health away. That theory was tested last week in the brou-ha-ha over HSA substantiation.
While the bill passed the House, it also came only one vote shy of being “recommitted” to the Ways & Means Committee. And it is unlikely to survive in the Senate.
Most importantly, this was a test run for future challenges. Most of the HSA vendors have never in the past been very politically active. They’ve been trying to start and then grow their businesses. But this time, they were called upon to do more and many of them responded by contacting their clients to write letters and make phone calls.
Because HSAs now have decent market penetration, there is a lot at stake in ensuring the survival of the product, and there are resources that can be tapped into.
Plus, there are serious advocates in Washington with political savvy who can now mobilize the “HSA community” and have the communications tools to do it effectively. Prominent among these are Dan Perrin of the HSA Coalition, Roy Ramthun, and Brian McManus of the Health Care Freedom Coalition.
Congratulations to all who participated in this effort. We are building a tiger.