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Health Savings Accounts (HSAs) have been called a "Health Care IRA." With an HSA, an eligible individual has the opportunity to set aside money on a pre-tax basis to pay for health care expenses. A key feature of a HSA is that funds can be 'rolled over' from one year to the next without forfeiture. Many benefit experts foresee significant growth in Health Savings Accounts, especially when linked with a 'consumer driven' strategy to educate health care buyers.
The U.S. Treasury Department issued guidance that effective January 1, 2006, a high deductible plan "may cover certain preventive drugs" and waives the plan deductible. C.M. Smith can help you understand the impact of this coverage election.
In December, 2006, President Bush signed a tax bill which should broaden the appeal of Health Savings Accounts (HSAs), by "delinking" the HSA contribution from the underlying health plan deductible. For 2007, the indexed amounts are $2,850 for single coverage and $5,650 for family coverage.
The bill also allows employers - on a one-time basis - to rollover unused Flex Spending Account and Health Reimbursement Account balances to HSAs.
Among other changes, the bill also allows employees - on a one-time basis - to make a tax-free transfer of money in their IRAs to their HSA.
The Department of Labor released guidance on HSAs and related issues in January 2007. The Field Assistance Bulletin is divided into eleven Question and Answer segments, and can be found at www.dol.gov.
Allow the benefit experts at C.M. Smith the opportunity to review the important features of Health Savings Accounts with you, and see how this interesting tax-favored vehicle can help you and your eligible employees obtain more value from your health insurance program.
IRS Issues Final Rules for Employer Comparable Contributions to Health Savings Accounts under 4980G
***On April 17, 2008, the Treasury Department issued final regulations on employer comparable contributions to employees' Health Savings Accounts (HSAs) under Section 4980G of the Internal Revenue Code of 1986, as amended (the "Code") in instances where employees have not established the HSAs by December 31st and where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses. The final regulations maintain all of the substantive provisions included in the proposed regulations issued in June of 2007. The proposed and final regulations address an issue that was "reserved" when the IRS in July 2006 released final regulations imposing an excise tax for an employer that fails to make comparable contributions to HSAs of its employees. Click here for further information.
ADDITIONAL RELATED INFORMATION
Documents
New HSA Law LegalAlert
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