NEW HSA LEGISLATION SIGNED INTO
LAW ON DECEMBER 20th, 2006
In one of the last acts of the
109th Congress, the Senate and House both passed H.R. 6111
before adjourning. The bill, sponsored by outgoing House
Ways & Means Committee Chairman Bill Thomas (R-Calif.), included
a number of provisions that will improve the operations of
Health Savings Accounts (HSA's). The reforms are effective
as of 1/1/07 and are expected to help increase usage of these
plans among all Americans.
The bill's provision include the
following:
1. It allows HSA's to be
funded with a one-time transfer from an Individual Retirement
Account (IRA), enabling individuals who otherwise would be
unable to fund their HSA the tax advantage provided by HSA's
when paying for medical expenses
2. It allows individuals
to make the maximum annual contribution to HSA's at any point in
a given year; previously, they were only allowed to make a
pro-rated contribution based on their enrollment dates.
3. It allows individuals
to contribute amounts that are equal the annual contribution
limit, regardless of their plans' deductible limits; previously,
they were only allowed to contribute amounts equaling their
deductibles
4. It allows funding for
HSA's to come from a Health Reimbursement Arrangement (HRA) or a
Flexible Spending Account (FSA) in the form of a one-time
rollover.
5. It allows employees
with lesser earnings to receive higher contributions from their
employers into the HSA.
HSA funding is 100%
tax-deductible, tax-deferred while growing, and available for
tax-free usage if used to pay for medical expenses. Annual
contributions in 2007 are capped at $2,850 per individual and
$5,650 per family. In addition, those age 55 and older may
also contribute a "catch-up" contribution of $800.
In a remarkable turn of events,
this 109th Congress and President Bush where able to expand
HSA's once again. The new HSA provisions will help expand
healthcare coverage options for many Americans. I
applaud Congress and the President for their commitment.
Truly yours,
Brian Miskovitz, Vice President
