GOP Lawmakers Add Provision to Passing Tax Package

The Ways and Means Committee approved the provision in late September, right before Congress adjourned for the midterm elections. The legislation was passed neither in the Senate nor on the House floor until it was okayed as part of the larger bill last weekend.

"This has been a clear Republican priority and there was an opportunity . . . to move this package of good legislation," said Ianthe Jackson, spokeswoman for the Ways and Means Committee. "This is something that Mr. Thomas believes in, and making minor adjustments will help these accounts continue to grow."

HSAs were created to encourage people to choose high-deductible insurance plans, take control of their health-care spending and, ultimately, bring down medical costs. High-deductible plans are increasingly popular among employers because they are less expensive than traditional plans. HSAs allow families enrolled in such plans to sock away money tax-free to pay their out-of-pocket expenses. Under current law, annual contributions to the accounts are limited to the amount of a person's annual insurance deductible and cannot exceed $2,700 for an individual or $5,450 for a family.

Under the new law, if it is signed by President Bush as expected, any health savings account holder could choose to shelter the maximum amount, which is scheduled to increase next year to $2,850 for individuals and $5,650 for families.

The HSA provision was one of several pro-business items that managed to get through Congress at the eleventh hour. The tax measure revived more than 20 tax breaks, at a cost of $38 billion over five years, and nearly a dozen credits promoting alternative energy sources. It also opened 8.3 million acres in the Gulf of Mexico to oil and gas drilling and prevented a 5 percent cut in Medicare payments to doctors from taking effect Jan. 1.

Health savings accounts were not publicly identified as part of those negotiations until Thursday, after House and Senate negotiators, including Thomas and Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), emerged from an early-morning session with an agreement about what the final package would include. Hours later, the Ways and Means Committee released an explanation of that legislation, with the expansion of health savings accounts slipped in among 22 tax breaks, 11 energy measures and nearly 30 "other provisions."

In a news release, Thomas called the package "a bipartisan compromise that is 'must-do' work in Congress this year." He urged "my House and Senate colleagues to approve it quickly."

They did so after midnight Saturday, with both chambers giving overwhelming approval to the legislation. The HSA provision was barely mentioned in the closing congressional debate.