Treasury Department, IRS Issue Guidance on Health Savings Accounts
The Treasury Department and the Internal Revenue Service on Friday issued a guidance on health savings accounts, answering 88 questions about the accounts raised by the public during the past year, the AP/Houston Chronicle reports (Crutsinger, AP/Houston Chronicle, 7/23). Under the new Medicare law, HSAs, which allow individuals to save funds tax-free for future medical expenses, are available to members of health plans that have a deductible higher than $1,000 for an individual and $2,000 for a family. Employees, employers or both can contribute as much as a combined $2,600 for individuals and $5,150 for families for HSAs each year. In addition, employees can establish HSAs when employers do not offer them (California Healthline, 7/12). Friday's notice on HSAs is the third set of guidelines issued since the Medicare law was signed in December (America's Health Insurance Plans release, 7/23). The guidance includes the following clarifications:
- Otherwise eligible employees who belong to employee assistance plans, disease management plans or wellness programs would not be disqualified from HSAs;
- Mistaken distributions from an HSA could be repaid to the account without penalty or tax;
- Rules for flexible spending salary deductions do not apply to HSA salary-deducted contributions;
- Employers cannot restrict HSA access to employees on the grounds that employers do not believe expenses qualify as covered health care;
- HSA funds can be used for preventive medicine, including for weight-loss and tobacco cessation programs; and
- Seniors who are not enrolled in Medicare can use HSAs.