STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - July 13, 2006)
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By Mr. CRAIG (for himself and Mr. COBURN):
S. 3655. A bill to amend the Internal Revenue Code of 1986 to allow individuals eligible for veterans health benefits to contribute to health savings accounts; to the Committee on Finance.
Mr. CRAIG. Mr. President, I seek recognition today to introduce legislation to allow veterans who use the VA health care system to establish health savings accounts, HSAs. This legislation will increase health insurance options for veterans and their families, provide future options in the choice of health care providers for veterans, and could ultimately allow veterans who are forced to rely on the VA health care system today to choose to receive care from the private health care system in the future.
As my colleagues are aware, current law allows individuals who purchase a high deductible health insurance plan to contribute funds, on behalf of themselves and their family, to a health savings account. Funds are contributed to the HSA on a pretax basis and then can be withdrawn for qualified health care expenses without any tax consequence.
In order for a person's HSA to be in ``good standing'' with the IRS, the individual cannot carry health insurance that provides coverage for any health services prior to reaching the deductible amount of the high deductible plan. Of course, like many government programs, there are exceptions to the rules for certain circumstance. Most notably, a person does not jeopardize an HSA by purchasing long-term care or accident insurance nor is the receipt of workman's compensation coverage disqualified from contributing to an account. Yet the IRS has advised the health insurance industry that VA health care would count as a health insurance plan that provides coverage for health care services prior to reaching the high deductible limit. Therefore, veterans who use VA are not eligible to establish health savings accounts.
At the time this issue was brought to my attention, the argument was limited to the narrow issue of service-connected veterans being denied an opportunity to avail themselves of the tax advantages of an HSA simply because they suffered an injury related to their service in the military and the government was providing care for that injury. Of course, that seemed outrageous to me. Like any employer, the Government has an obligation to provide treatment for injuries sustained while military personal are serving our country. And if workman's comp is a current exemption, why not VA care?
So, I set out to draft a bill to allow service-connected veterans who use VA for service-connected treatment to establish HSAs. But, the more I considered the arguments for allowing those who use VA for service-connected conditions to have HSAs, the more I realized that the arguments applied just as strongly to all VA patients. I would like to take a moment to explain my arguments.
First, the current law unfairly affects families of veterans when the veteran is the sole provider of income for the family. As everyone knows, VA is not a family health care provider except in the extreme case of a permanently disabled service-connected veteran. Therefore if a veteran--even a service-connected veteran--uses the VA health care system, current law does not even allow that veteran to contribute money on behalf of his family to an HSA. What good does that do? Why would we prohibit a veteran from providing health coverage to his or her family? In my opinion, that does neither the veteran nor his or her family any good. It is simply a well-intention policy when applied to HSAs, with a harmful, unintended consequence as applied to veterans.
Second, under current law VA is permitted to bill insurance carriers for the treatment of nonservice connected conditions. Further, many veterans are required to pay copayments to VA in order to receive that same care. So, veterans have out-of-pocket medical expenses and VA can bill their insurance provider. Yet we have a policy that disallows the establishment of a tax free account to pay for those medical expenses and--even worse--provides a disincentive for the veterans to buy an insurance policy that VA could one day bill. Again, I understand the genesis of the policy. However, it is having unintended consequences when applied to our veterans.
Finally, while it is true that more and more veterans are choosing to use VA as their provider of choice as a result of the excellent care provided by the system, there are still hundreds of thousands of veterans who use VA because they are financially unable to afford the private health system. I am proud that this Nation stands by those veterans who cannot provide for their own care in the private system. However, I do not think we should statutorily preclude them from even trying to take control of their own health care finances.
What harm would come if a veteran, who uses VA today because he or she has no other option, was suddenly allowed to purchase a low premium, high deductible plan and then begin to contribute to a savings account that he or she would now own. I say no harm at all. The only thing that could come of this is that the veteran may one day say to his government: I was there for you when you needed me. You were there for me when I needed you. Now, I no longer need you.
Again, I am not saying that veterans should feel as though I am trying to get them to leave the VA system. I am not. But, I certainly do not want to stop a veteran from choosing to buy insurance, start saving in an HSA, and one day leaving the system. I think one of the things government can do for its citizens is provide the tools and assistance that will allow Americans to provide for themselves. That is what this legislation is about.
I am confident that many of you will agree with the premise that it is a basic issue of fairness to support allowing service-connected veterans to establish HSAs. But, I also hope that I have demonstrated here today that it is sound public policy to extend the HSA option to all veterans who use VA's health care system.
I urge my colleagues to be cosponsors of this legislation and I urge passage of the bill as soon as possible.
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