Guidance on rollovers to HSAs

✍ Scribed by Shirley Dennis-Escoffier

• Publisher: John Wiley and Sons
• Year: 2007
• Tongue: English
• Weight: 69 KB
• Volume: 18
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/jcaf.20330

✦ Synopsis

The rising cost of health care insurance has caused many employers to change from traditional health insurance plans to high-deductible health plans. Congress has created several vehicles that can be used in conjunction with these plans to pay for out-of-pocket expenses on a tax-favored basis, including the health savings account (HSA), the flexible spending account (FSA), and the health reimbursement arrangement (HRA). While FSAs and HRAs can be general purpose and used in conjunctions with various health plans, HSAs can only be used by individuals with a highdeductible health plan. In December 2006, Congress modified the rules to encourage broader use of HSAs by allowing one-time rollovers from a FSA or HRA into an HSA. The IRS recently issued Notice 2007-22 explaining how rollovers can be accomplished on a tax-free basis under these complex rules.