New Corporate Guidance On HSAs Released By Treasury Department
Employers are getting clarification of Health Savings Account rules through a new Treasury Department Guidance.
The Department of the Treasury has released Notice 2008-59 providing guidance on a number of issues regarding health savings accounts (HSAs).
The guidance is intended to address questions concerning the establishment of HSAs, permitted contributions and distributions from HSAs, and the types of health coverage that may be provided in connection with or in addition to an HSA qualified high deductible health plan (HDHP).
According to AHIP, the Notice addresses a number of issues including the following:
- HSAs may be offered in combination with a limited-purpose or post-deductible Flexible Spending Arrangement (FSA) or Health Reimbursement Arrangement (HRA). These FSAs and HRAs may be used to pay for certain kinds of excepted benefits, such as vision or dental care or for expenses incurred after the deductible on the qualified HDHP has been met.
- An employer may offer an HRA that pays for the premiums on an employee's HSA-qualified HDHP. The employer may not, however, reimburse medical expenses that are incurred before the HDHP deductible is reached.
- A qualified individual may only be covered by a qualified HDHP and may not have other "mini-med" plan coverage that pays for benefits other than "disregarded coverage," as defined under §223(c)(1)(B) or preventive care, as defined under §223(c)(2)(C).
- A qualified HDHP must provide "significant benefits" to the individual. For example, a plan that only pays for a certain number of in-patient hospital days and for specified surgery charges would not be qualified.
- Individuals that are qualified for, but not enrolled in Medicare Part D are eligible to contribute to an HSA. In addition, individuals who receive preventive benefits or "disregarded coverage" through the Department of Veterans Affairs or from an employer's on-site medical clinic are eligible to contribute to an HSA.
- Employers are allowed to allocate annual contributions to the prior year's HSA of an employee. In addition, an employer may recover contributions if the individual fails to establish an HSA.
- HSAs may be administered through a debit card that restricts payments and reimbursements to qualified medical expenses as long as the account beneficiary may access the funds through other means (e.g., withdrawals from an automatic teller machine or check writing).
- The determination of the date on which an HSA is established depends on state trust law (which typically requires an account to be funded and may require an account signature).
- Account beneficiaries may authorize other individuals to make withdrawals from the HSA if the funds are used to pay for the qualified medical expenses of the account beneficiary or his or her spouse or dependents.
Details and the guidance are available at http://www.treas.gov/press/releases/reports/notice200859.pdf.