United States Representative Paul Ryan, R-Wisconsin, selected by Mitt Romney as his running mate on the 2012 Republican presidential ticket, is a longtime supporter of health savings accounts and is the co-author of the last major bill to win congressional approval that liberalized HSA rules.
In 2006, Rep. Ryan, along with Rep. Eric Cantor, R-Virginia, now the House Majority Leader, introduced legislation that boosted the appeal of HSAs. That legislation later was attached to a broader tax bill that Congress approved during the closing days of a post-election session.
The most significant change in the legislation involved the maximum HSA contribution. At the time, the maximum annual contribution was the lesser of either the deductible in the health insurance plans to which HSAs are linked or a statutory indexed amount, which at the time was $2,700 for single coverage and $5,540 for family coverage.
With plan deductibles often in the $1,500 range for single coverage and $3,000 for family coverage, the link between deductible levels and maximum contributions prevented employees from putting more into the accounts.
And raising deductibles wasn't a practical solution because many employees couldn't afford such a significant exposure to uncovered medical expenses.
The Cantor-Ryan bill addressed this issue by removing the link between the maximum HSA contribution and the plan deductible. Instead, the maximum contribution would be the statutory maximum. That has meant that employees in many cases have been able to pump hundreds of additional tax-free dollars into their HSAs. The current maximum annual contribution is $6,250 for family coverage and $3,100 for single coverage.
Another problem resolved by the measure was one faced by employees, such as new hires, who become eligible for HSA coverage later in a year. At the time, the maximum annual contribution to an HSA was pro-rated to reflect when the employee became eligible for coverage.
The Cantor-Ryan measure, though, resolved that issue by allowing the maximum HSA contribution—regardless of when an employee became eligible for coverage.
"By making them more accessible and fixing glitches in tax law that limit their usefulness, we can ensure that HSAs live up to their potential," Ryan said at the time the legislation was passed.