Healthcare Reform and HSAs
On March 23, 2010, President Obama signed into law far-reaching healthcare financing legislation. We wanted to provide you with an overview of the impacts to Health Savings Accounts (HSA). First, there will be no changes to HSAs the rest of this year. Some of the changes will be effective January 1, 2011. Here is what to expect:
Qualified Medical Expenses: Starting January 15, 2011 you will no longer be able to pay for over-the-counter medications from your HSA as a qualified medical expense. The new law removes over-the-counter drugs not prescribed by a physician from being paid from an HSA, FSA, or HRA on a tax-free basis.
Non-qualified expense penalty: Under the new law, if you use your HSA funds for non-qualified expenses, you will face a higher penalty. The tax penalty for non-qualified HSA distributions will increase, effective January 1, 2011, from 10% to 20%.
Mandated insurance coverage: Effective January 1, 2014, the legislation will require most U.S. Citizens and legal residents to have health insurance. It also outlines the minimum coverage and essential health benefits that need to be provided for a plan to qualify for the mandated coverage. This could potentially limit the types of health plans that will be available to consumers.
Click here to learn more about healthcare reform and HSAs.