April 2, 2004
Guidance Issued on New HSAs
Community bankers interested in the recently enacted "Health Savings Accounts" (HSAs) now have further guidance from Treasury on their structure and use. Basically, the HSA is a savings account for health care expenses with few restrictions or limitations. The key is that an HSA must be linked to a high-deductible health insurance policy. All Americans under the age of 65, regardless of their employment status, qualify for an HSA. Insurance companies, banks and other approved financial institutions can offer these accounts.
HSAs may be attractive because all money going in would be pre-tax dollars and withdrawals for medical care would be tax-free. Individuals younger than 65, employers or family members can make pretax contributions into their account equal to the plan deductible, up to a maximum of $2,600 a year for individuals and $5,150 for families.
Additional information and helpful links detailing the new HSAs are available at www.icba.org under tax and budget and at http://www.ustreas.gov/press/releases/js1278.htm