GOP Lawmakers Add Provision to Passing Tax Package

[cal04]

Measure Expands the Amount That Can Be Given Tax-Free to Health Savings Accounts

Republican lawmakers, with little public debate, quietly added a billion-dollar health-care benefit to legislation that was rushed through Congress just before it adjourned Saturday morning.

Acting at the urging of several major business lobbies eager to reduce their medical-insurance costs and the outgoing chairman of the House's tax-writing committee, lawmakers adopted the provision even though only a single committee had previously approved it.

The provision, which materialized without fanfare late last week inside a massive tax-cut measure, expands the amount of money that can be contributed tax-free to health savings accounts (HSAs). The accounts can be used to pay medical bills and for other health-related coverage.

The legislation allows anyone to shelter thousands of dollars annually in HSAs, regardless of how much that person pays for a health-insurance deductible. Current law limits HSA contributions to the amount of a person's deductible. The expansion would cost the government $1 billion in lost tax revenue over the next decade.

http://www.washingtonpost.com/wp-dyn/content/article/2006/12/10/AR2006121000884.html

[Erika]

1. Minimum wage workers are left out again

Tax breaks for the rich again. The GOP didn't learn a thing. They will.

[krispos42]

2. I had an HSA once...

And at the end of the year, any balance that was left in there unused was wiped out.

I fail to see the advantage of this. If I shove a million bucks in there and only use $4,000 of them, I lose $996,000. It lowers my taxable income by a million bucks, but the top tax bracket is only like 39%, or $390,000. So option A, puttting the money in the account, saves me $390,000 in taxes but costs me $996,000 in lost HSA money, a net loss of $604,000.

Am I missing something? Do some plans allow rollovers?