Health Savings Account Blog

"Those funds can then be withdrawn by individuals to pay for qualified health care expenses. When coupled with a high-deductible, low-premium health insurance policy, HSAs allow people to provide for their own health care needs and do so tax free."

Craig’s committee would not have jurisdiction over the legislation he plans to introduce. Because it changes tax law, the bill would be referred to the Senate Finance Committee, which could have difficulty acting on it.

Tax legislation must originate in the U.S. House of Representatives, where there is no similar proposal at the moment. However, if the House were to send the Senate a tax bill, even one unrelated to veterans or health savings accounts, the Senate could attach Craig’s proposal if he can gain enough support.

Under current law, veterans enrolled in the Department of Veterans Affairs health care system are prohibited from using a health savings account. “That’s crazy,” Craig said. “That means a service-connected veteran, using the system the government established to care for his or her injuries now, must surrender a tax advantage. That’s not right.”

Because of how the law is written, it isn’t just a veteran who is denied the tax advantage but also the veteran’s family, Craig said. That’s because the law can be interpreted as prohibiting a veteran enrolled with the VA for health care from having any pre-tax health savings account, whether for the veteran or his or her family.

“With limited exception, VA is not a family health care provider,” Craig said. “That could mean that a veteran who uses the VA health care system may be cheating himself out of contributions to an HSA that could cover his entire family for care that VA will not provide to them.”

Craig said the prohibition doesn’t seem to serve any purpose. “Veterans are just being treated differently under the law, and cannot enjoy a tax break others enjoy.”

Learn more about Health Savings Accounts at http://www.health--savings--accounts.com/