In a comment letter sent to the Department of Labor this week, the American Bankers Association’s HSA Council urged the agency to exclude health savings accounts from proposed amendments to its investment advice regulation and related prohibited transaction exemptions.
The proposal expands the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974 or the Internal Revenue Code of 1986. Proposed changes include a new regulatory definition of fiduciary when a person renders investment advice for a fee or other compensation for purposes of Title I and Title II of ERISA, as well as related proposed amendments to Prohibited Transaction Exemption 2020-02 and several other administrative exemptions from the prohibited transaction rules applicable to fiduciaries under ERISA. The fiduciary proposal’s definition of individual retirement accounts includes HSAs.
ABA said HSAs should be excluded because of the significant differences between IRAs and HSAs. If HSAs are not excluded from the proposed rule, ABA asked the department to consider that the platform provider exception apply and PTE 2020-02 should be revised to expand the definition of “financial institution” to include IRS-approved nonbank trustees.
Applying the rule to HSAs would “significantly and unnecessarily increase the cost of offering HSAs, meaning fewer custodians would enter or continue in this business, thereby restricting HSAs from achieving their congressionally mandated purpose, which is to provide Americans with a convenient source of funds for qualified healthcare expenses and to save on medical expenses through a tax-advantaged vehicle,” ABA wrote.