News
IRS ISSUES ADDITIONAL GUIDANCE ON HEALTH SAVINGS ACCOUNTS
On June 25, 2008, the Internal Revenue Service issued IRS Notice 2008-59 which provides additional Health Savings Account (HSA) guidance in the form of forty-two (42) Q/A’s covering a variety of topics.
The topics dealt with in this notice are as follows:
- Eligible Individuals
- High Deductible Health Plans
- Contributions
- Distributions
- Prohibited Transactions
- Establishing an HSA
- Administration
Among items of interest are:
- Coverage under a limited-purpose Health Reimbursement Arrangement (HRA) that includes dental, vision and preventive coverage, can also include HDHP premiums without affecting the HSA eligibility of the HRA participant.
- In the case of a switch from family HDHP to self-only HDHP coverage, the HDHP can use any reasonable method to allocate covered expenses incurred during the period of family coverage to satisfy the deductible for self-only coverage.
- An employer may allocate HSA contributions (including salary reductions) made between January 1 and April 15 to the previous year.
- An HSA can be administered through a debit card that restricts payments and reimbursements to healthcare, as long as the funds can be also be accessed through on-line withdrawals, ATM withdrawals or check writing.
- The guidance confirms that state trust laws govern when an HSA is established.
- Administrative and maintenance fees withdrawn from a HSA are not reported as distributions.
For further details, please see IRS Notice 2008-59
If you have any questions regarding this notice, please do not hesitate to contact our office.