Member Memo | RE: HSA/FSA Update

Jul 20, 2023


FROM: Peter Reinecke and Patricia Knight, UNPA Senior Political Advisors

RE:       HSA/FSA Update

DATE:   July 20, 2023

Today, bipartisan legislation was introduced in the House of Representatives that would provide tax incentives to millions of Americans effectively lowering their cost of purchasing dietary supplements.   The Dietary Supplements Access Act would end decades of non-sensical tax policy that disincentives healthy lifestyles and denies personal choice.

Over 35 million Americans have over $100 billion in tax preferred health savings accounts or HSAs.  And Americans have over 21 million flexible spending accounts or FSAs through their employers.  While these accounts are meant to help make health care more affordable, the IRS has interpreted that dietary supplements are not eligible expenses to paid for through these accounts.    The bipartisan bill introduced today by Representatives Darin LaHood (R-IL), Brendan Boyle (D-PA), John Curtis (R-UT) and Josh Gottheimer (D-NJ) would end this misguided interpretation and clearly establish that Americans can use their HSA and FSA funds to help pay for the dietary supplements they and their families use to promote and protect their health.   As introduced, the bill covers all dietary supplements.

The legislation will be referred to the House Ways and Means Committee.   The good news is lead sponsor Rep. LaHood is a fairly senior member of that Committee’s Majority (6th of 25 Republicans).

Also, the five major dietary supplement trade associations – UNPA, AHPA, CHPA, CRN and NPA —  are now unified and are all working to build support for the bill.    We are also working on securing bipartisan cosponsors of the bill in the Senate.

While harsh disagreements between Republicans and Democrats are making it difficult to pass even basic legislation like the annual budget to keep the federal government operating, the House and the Senate have shown interest in and the ability to pass bipartisan legislation in some areas.  That said, with the current congressional interest in fiscal restraint, the likelihood that this bill will be “scored” as having a substantial cost also poses a challenge for its prompt passage.

We have been working with the other trade associations to build a case that this legislation which encourages good health should be seen as a cost saver.  That said, Congress defers to official scoring bodies like the Joint Committee on Taxation (JCT) to make official estimates of tax legislation’s budgetary impact.  Prior to now, JCT has always scored this as a “cost.”

But that said, we believe the bill at a minimum presents an important opportunity to educate Members of Congress and their staffs about the important role played by dietary supplements in the health care of the majority of Americans.  It also presents an opportunity for elected officials to give their constituents greater control over their own savings accounts and make health care more affordable.

We are urging all UNPA members to contact (via phone call or email) their Members of Congress in the House of Representatives and urge them to cosponsor this legislation.   

Attached are some talking points for you to consider as you make this outreach.   Also attached is a copy of the legislation and a sheet of information on the bill that you can share.  We are also happy to answer any questions you may have or do follow up with your outreach.

  • Hi, I’m calling from xx, a health products company in your district.   We are a xx$$ company that employes xx workers, many of which are in your district.  (NOTE: If calling, you may want to ask to speak to the Member’s legislative director or legislative assistant who covers health care issues.)
  • We are reaching out to urge you (your member of Congress) to cosponsor the bipartisan Dietary Supplements Access Act recently introduced by Representatives LaHood, Boyle, Curtis and Gottheimer.
  • This is a bipartisan bill that would make health care more affordable by giving the 35 million Americans who have Health Savings Accounts (HSAs) and the 21 million workers who have flexible spending accounts (FSAs) through their employers.     
  • About 80 percent of Americans take vitamins, minerals and other dietary supplements to bolster their health.  But under the IRS’s interpretation of tax law, HSA and FSA account holders can’t use their funds to cover the costs of these supplements.   This bill would change that, helping millions of Americans support a healthy lifestyle.
  • The millions of Americans who have these accounts have said they want this change.  A new survey found that fully 78 percent of Americans with HSAs and FSAs support allowing reimbursement of dietary supplements with these accounts.
  • While some have had concerns that HSAs primarily benefit the wealthy, that is simply not the case.  New data shows that about half of all HSAs are held by middle income Americans with total household incomes of under $72,000.
  • Also, those with FSAs have to spend all of their funds within a year (with some grace period) or they are forfeited.    A recent study estimated that Americans were forced to forfeit $4.2 billion in unused FSA funds in 2020.    Given that 4 0f 5 Americans use dietary supplements, it can safely be assumed that allowing the reimbursement of dietary supplements could have benefited many of those who forfeited $4.2 billion in unused FSA funds.
  • Please cosponsor this bipartisan bill, the Dietary Supplements Access Act.    Can you get back to me once you have reviewed the bill to let me know if you are able to cosponsor or if you have questions?