FOR IMMEDIATE RELEASE
ICBA Praises New Health Savings Account Enhancements
Changes Make HSAs More Consumer-Friendly
Washington, D.C. (December 14, 2006)—The Independent Community Bankers of America (ICBA) praised legislation passed by Congress that provides even better options for individuals and small businesses to access health care coverage through Health Savings Accounts (HSAs). The ICBA-backed Tax Relief and Health Care Act of 2006 is now set to be signed into law by President Bush.
"Today a growing number of community banks offer their customers Health Savings Accounts and more than 3.2 million consumers are already using HSAs," said Paul Merski, ICBA chief economist and director of federal tax policy. "The new enhancements enacted in this legislation will allow even more individuals a flexible spending option for health care expenses. There are no income limits that effect eligibility, the savings accumulate tax free, and the money belongs to the saver, making it portable no matter where you work."
The newly added enhancements making HSAs even more attractive include:
- Eliminating the link between the savings contribution amount and the health plan deductible. In 2007, individuals can save up to $2,850 for a single person and $5,650 for a family regardless of the health plan's deductible. The contribution is also indexed to inflation.
- Allowing individuals who enroll in an HSA-eligible health plan at mid-year to make a full-year contribution. Current law requires the plan to only allow a prorated HSA contribution after the plan year begins.
- Allowing individuals a one-time, tax-free transfer of amounts in flexible spending arrangements (FSAs) or health reimbursement arrangements (HRAs) for the purpose of funding an HSA.
- Allowing taxpayers to make a one-time distribution from an Individual Retirement Account (IRA) to fund an HSA, subject to HSA contribution limits.
Notably, 60 percent of consumers who expressed an interest in HSAs said they prefer to use a bank to deposit and manage their accounts, according to a survey by Synergistics Research Corp., Atlanta, Ga. In addition, of more than 600 banks offering HSAs, 35 percent are community banks. Some 52 percent of all current HSA users said they went to their local bank to open an HSA. The number of HSAs is estimated to grow to 15-25 million by 2010, with $75 billion in assets.
For more information about HSAs, visit your local community bank or go to www.ustreas.gov.