HSAs

[Official Guidance] Text of IRS Rev. Rul. 2010-23: Making Obsolete the Existing Revenue Ruling on Reimbursement of Drug Expenses by FSAs, HRAs, HSAs, MSAs (PDF)
1 page. Excerpt:"Because the definition of medical expenses has been changed, the Internal Revenue Service has concluded that the ruling position stated in Rev. Rul. 2003-102 is no longer determinative. Accordingly, Rev. Rul. 2003-102 is declared obsolete as of the effective date of section 9003 of the Affordable Care Act."(Internal Revenue Service)

New IRS Guidance on Health Care Reimbursement
Excerpt:"The IRS said that Notice 2010-59 provides guidance on new section 106(f) of the Internal Revenue Code, added by section 9003 of the Affordable Care Act. That section sets forth a new standard, effective January 1, 2011, for reimbursement of expenses for over-the-counter drugs from all workplace health plans . . . ."(PLANSPONSOR.com)

High-Deductible Plans Grow, but Not Everyone Should Get on Board
Excerpt:"In exchange for picking up a larger share of their own health care costs, employees pay lower insurance premiums and are allowed to use pretax dollars to pay out-of-pocket costs. But many consumers embracing the plans have discovered there are pitfalls aplenty, including out-of-pocket expenses they cannot afford."(New York Times; free registration required)

[Guidance Overview] Health FSAs: Growing Stronger, Facing Changes
Excerpt:"Health care reform arrived in March 2010, via the Affordable Care Act (ACA), but the effect on Health FSAs will arrive in two future stages: January 1, 2011, and January 1, 2013. Based on the findings of a recent survey, Health FSAs appear strong enough to endure the changes."(Infinisource)

What Do We Really Know About Consumer-Driven Health Plans?
Excerpt:"Surveys show that employers offering a CDHP increased from less than 5 percent in 2005 to between 12?15 percent by 2009. Growth in offer rates can be seen across all firm sizes."(Employee Benefit Research Institute (EBRI))

[Opinion] Health Care Reform and HSAs: Issues of Concern
Excerpt:"Tax Increases: ObamaCare raises taxes on HSAs and makes them less consumer friendly: January 1, 2011: Over-the-counter (OTC) drugs and other household health care items cannot be reimbursed tax-free from HSAs without a prescription. This will increase taxes on American families by $5 billion. January 1, 2011: Penalty for non-qualified withdrawals from HSAs increases from 10 percent to 20 percent. There is no'hardship'exception. This will increase taxes on American families by $1.4 billion."(House Republican Conference)

[Guidance Overview] CMS Updates Mandatory Reporting User Guide: Requires Reporting of'Linked'HRA Coverage and Makes Other Changes
Excerpt:"EBIA Comment: For many ['responsible reporting entities'], elimination of the exception for'linked'HRA coverage will simply require the addition of new information to their reports. RREs who handled only linked HRAs, however, must now register and prepare to report (or find an agent to report for them)."(Employee Benefits Institute of America)

IRS/Treasury Officials Provide Informal Views on Variety of Benefit Topics, Including Leave Sharing, HSAs, and 401(k) Plans
Excerpt:"While the answers in the report [on the views and remarks of the officials] do not necessarily represent IRS or Treasury policy, they provide helpful insight regarding the issues addressed."(Employee Benefits Institute of America)

Healthcare Reform Could Accelerate Shift to High-Deductible Plans
Excerpt:"The reform law's move to cap FSA contributions at $2,500 annually, beginning in 2013, also may spur employees themselves to take a second look at health spending accounts . . . ."(Workforce Management)

[Official Guidance] Text of IRS Final Regs on Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirements; Disclosure Requirements With Respect to Prohibited Tax Shelter Transactions; Requirement of Return and Time for Filing (PDF)
11 pages. Excerpt:"This document contains final regulations that provide guidance under section 4965 of the Internal Revenue Code (Code), relating to entity-level and manager-level excise taxes with respect to prohibited tax shelter transactions to which tax-exempt entities are parties . . . ."(Internal Revenue Service)

[Guidance Overview] What Will Health Reform Mean for HRAs, HSAs, and FSAs?
Some changes to those account-based plans will be effective January 1, 2011. (PLANSPONSOR.com)

Using a HSA to Pay for Retirement Medical Costs
Excerpt:"If distributions are spent on qualified medical expenses no taxes will be due upon withdrawal."(U.S. News&World Report)

[Guidance Overview] Additional Tax on Distributions from HSAs and MSAs under Health Reform
Excerpt:"The additional tax on distributions from health savings accounts (HSAs) and Archer medical savings accounts (MSAs) not used for qualified medical expenses is increased to 20% of the amount of the distribution included in gross income."(Wolters Kluwer)

Changes Under Health Care Reform to the Cver-the-Counter Medicine Rules
Excerpt:"One provision that is effective fairly quickly is the change to the over-the-counter drugs/medicines rules in Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA) and Health Savings Accounts (HSA)."(TRI-AD)

[Guidance Overview] 2011 Minimums and Maximums for Health Savings Accounts Plans and High-Deductible Health Plans Unchanged from 2010
Excerpt:"As in 2009 and 2010, individuals age 55 or over can contribute an additional $1,000 to their HSAs in 2011 and subsequent years."(The Segal Group, Inc.)

Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006?2009 (PDF)
32 pages. Excerpt:"ASSET LEVELS GROWING: In 2009, there was $7.1 billion in consumer-driven health plans (CDHPs), which include health savings accounts (or HSAs) and health reimbursement arrangements (or HRAs), spread across 5 million accounts. This is up from 2006, when there were 1.2 million accounts with $835.4 million in assets, and 2008, when 4.2 million accounts held $5.7 billion in assets."(Employee Benefit Research Institute)

[Guidance Overview] The 2011 Limits for Health Savings Accounts and High-Deductible Health Plans (PDF)
Excerpt:"In Revenue Procedure 2010-22, the IRS provides the inflation-adjusted HSA contribution and HDHP minimum deductible and out-of-pocket limits for 2011. Under the cost-of-living adjustment and rounding rules of Internal Revenue Code Section 223, the 2011 amounts are unchanged from the amounts for 2010."(Buck Consultants)

HSA Contribution Limit Stays Same for 2011
Excerpt:"The maximum contributions that can be made to health savings accounts in 2011 will be the same as this year due to the cost of living remaining flat. Under Internal Revenue Service Revenue Procedure 2010-22, which was issued Monday, May 24, the maximum HSA contribution that can be made next year is $3,050 for employee-only coverage and $6,150 for family coverage -- the same as this year."(Workforce Management; free registration required)

[Official Guidance] Text of IRS Rev. Proc. 2010-22: HSA Limitations for 2011 -- No Change from 2010 Limitations (PDF)
2 pages. Excerpt:"The amounts for 2011 are unchanged from the amounts for 2010 because, after the application of the cost-of-living adjustment rules . . . the changes in the Consumer Price Index for the relevant period do not result in changes to the amounts for 2011. . . . For calendar year 2011, the annual limitation on deductions under ? 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,050."(Internal Revenue Service)

Health Savings Account/High-Deductible Health Plans Coverage Survey Report (PDF)
Excerpt:"The number of people with HSA/HDHP coverage rose to 10 million in January 2010, up from 8 million in January 2009, and 6.1 million in January 2008. Between January 2009 and January 2010, the fastest growing market for HSA/HDHP products was large-group coverage, which rose by 33 percent, followed by small-group coverage, which grew by 22 percent."(America's Health Insurance Plans)

Health Savings Account/High-Deductible Health Plans Enrollment: Supplement to Report (PDF)
5 pages of slides. (America's Health Insurance Plans)

[Guidance Overview] IRS Provides Guidance on Tax Treatment of Employer-Provided Health Benefits for Children Under Age 27
Excerpt:"Note that there is no corresponding amendment to the Code's HSA provisions, so the individuals whose expenses can be reimbursed tax-free from an HSA remain unchanged."(Employee Benefits Institute of America)

[Guidance Overview] A New Era Begins for Employer-Sponsored Coverage After Healthcare Reform (PDF)
13 pages. Excerpt:"To help you understand your obligations as an employer/plan sponsor, we have provided a detailed discussion of health care reform as it relates to group health plans, beginning with a general timeline of the applicable provisions."(Alston+Bird)

[Guidance Overview] Health Accounts'Limits for Over-the-Counter Medicines Under Health Reform
Excerpt:"[R]eimbursements for over-the-counter medicines through a health FSA, HRA, or other employer-provided accident or health plan may not be excluded from the employee's gross income. Also, distributions from an HSA or Archer MSA to pay for over-the-counter medicines may not be excluded from the employee's gross income and will be subject to additional penalty."(Wolters Kluwer)

[Guidance Overview] Limitation of Distributions from Health Accounts for Over-the-Counter Medicines
Excerpt:"The definition of qualified medical expenses, for purposes of reimbursements from health flexible spending arrangements (health FSAs) or health reimbursement arrangements (HRAs), and distributions from health savings accounts (HSAs) or Archer medical savings accounts (Archer MSAs), has been modified to include amounts paid for medicine or a drug only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin."(Wolters Kluwer)

Health Savings Account Funds Unlikely to Cover Retiree Health Costs
Excerpt:"Health savings accounts (HSAs) are likely to play a minor part in savings for health care costs in retirement, according to a report issued by the Employee Benefit Research Institute (EBRI). That is because both statutory contribution limits and currently low interest rates constrain the amount HSAs are able to generate, compared with the large amount needed to pay for retiree health expenses."(Wolters Kluwer)

Health Reform Provisions that Could Impact Consumer-Driven Health Plans (PDF)
3 pages. Excerpt:"The health care reform legislation approved by the 111th Congress (H.R.3590, now Public Law 111-148, as amended by the budget reconciliation bill, H.R.4872) will likely have a modest impact on consumer-driven health plans and their associated health care accounts (i.e., FSAs, HRAs, and HSAs). Earlier proposals that would have eliminated some of these options (particularly FSAs and HRAs) did not survive the legislative process. [The target page] is a description of the provisions that were included in the final legislation."(The Council for Affordable Health Insurance)

The Use of Health Savings Accounts for Health Care Costs in Retirement (PDF)
Pages 2-6 of 12 pages. Excerpt:"Health savings accounts (HSAs) are often touted as a vehicle for funding future retiree health care costs. However, statutory contribution limits mean that they are unlikely to play more than a minor part in savings for health care costs in retirement."(Employee Benefit Research Institute)

Health Savings Accounts May Benefit from Mandates for Companies
Excerpt:"Employers and individuals may take a closer look at using health savings accounts in conjunction with high-deductible health plans because the health care reform legislation includes mandates that employers with more than 50 workers purchase health care insurance, HSA proponents say."(Investment News; free registration required)

Hefty Tax Break, Health Savings Accounts, Spared in Health Care Bill
Excerpt:"Not only did many House members and senators decide to leave the accounts alone, but the president also came around, too. Earlier this month, in an effort to appease Republicans, he declared his support for also making H.S.A.'s available to people who would buy eligible insurance through the federally regulated insurance exchanges."(The New York Times; free registration required)

[Guidance Overview] Fix COBRA, HIPAA and Other Group Health Plan Violations Quickly: Here's Why
Excerpt:"The Internal Revenue Code imposes an excise tax on employers who fail to comply with various federal mandates for group health plans like COBRA and HIPAA. . . . The IRS [has] issued final regulations for self-reporting (and paying) the excise tax for such violations and a new form (Form 8929) to use to self-report, starting this year."(Miller Johnson)

Passage of Landmark Legislation Could Spur Even Greater Use of Health Savings Accounts
Excerpt:"The health care bill contains mandates that require individuals and employers with more than 50 workers to purchase health care coverage.'Those who will be subject to mandates in the future are looking for ways to control their costs before they get locked into something down the road,'said Roy Ramthum, president of HSA Consulting Services.'Employers are already moving to HSAs.'"(Investment News; free registration required)

Health Reform Legislation Will'Kill'Health Savings Account Plans
Excerpt:"Health reform legislation threatens to derail the adoption of health savings accounts (HSAs) and high-deductible health plans (HDHPs), and ultimately kill HSAs, according to a brief published by the National Center for Policy Analysis (NCPA)."(Wolters Kluwer)

[Opinion] Congress Declares War on HSAs
Excerpt:"[T]he health care bill passed by the Senate (December 24, 2009) does not directly outlaw HSA-eligible plans, but it restricts HSA options in insidious ways that will delay, deny, defeat and ultimately kill them."(National Center for Policy Analysis)

Demystifying High-Deductible Health Plans
Excerpt:"[A]t least half of large employers offer a high-deductible plan. The figure in 2009 was 54 percent, according to the Health Care Cost Survey by Towers Perrin (now Towers Watson). The survey focused on Fortune 1,000 companies."(Workforce Management)

Former Execs of Bankrupt HSA Administrator Accused of Fraud
Excerpt:"The FBI also alleges that the men used phony bank statements to conceal the diversion of approximately $19 million from HSAs and FSAs to Canopy's operating accounts in 2009, which they then misappropriated for their own use."(Workforce Management)

[Guidance Overview] Alzheimer's Expenses are Qualified Medical Expenses
Excerpt:"A recent information letter by the IRS addressed whether the monthly fee that is paid to an Alzheimer's medical facility is considered a qualified medical expense and in turn tax deductible."(Infinisource)

Missing HSA Money Raises Oversight Questions
Excerpt:"Thousands of people are learning that money they squirreled away in health savings accounts is gone. Many thought the money was sitting safely in banks. But now it appears it was stolen. Federal investigators have released few details, but all the cases have one thing in common: a Chicago company called Canopy Financial. Now critics are questioning whether more government oversight is needed for the accounts."(Morning Edition via National Public Radio)

Which Consumer-Driven Health Care Option Should You Choose: HSAs, FSAs, HRAs? (PDF)
4 pages. Excerpt:"As the satisfaction of consumer driven health plans hasincreased over the years, the interest has grown significantly. Unfortunately, many consumers and employers are confused about the differences between the various consumer driven plans and which optionwould be best for them. The Council for Affordable Health Insurance (CAHI) first prepared this analysis in 2002 and has updated it annually in an effort to help people make informed choices about consumer driven health plans."(Council for Affordable Health Insurance)

[Guidance Overview] IRS 2010 Versions of Forms 1099-SA and 5498-SA for HSA, Archer MSA, and Medicare Advantage MSA Trustees and Custodians
Excerpt:"EBIA Comment: Remember that trustees and custodians should not use these 2010 forms until 2011, when reporting for the 2010 tax year is due. The 5498-SA and 1099-SA information returns -- together with account-related information provided by employers on Forms W-2 -- provide useful information to account holders, who have reporting obligations of their own."(Employee Benefits Institute of America)

[Guidance Overview] Tax Court Holds That Sex Reassignment Surgery Expenses Were for Medical Care
Excerpt:"EBIA Comment: Determining whether an expense is for medical care is not always easy -- in addition to the majority opinion discussed above, multiple concurring and dissenting opinions were issued. The majority's holding differs from the conclusion reached in earlier Chief Counsel Advice on the same topic (see our Checkpoint Newsstand article), which we understand involved the same taxpayer. Meanwhile, health FSA administrators will appreciate having this new guidance."(Employee Benefits Institute of America)

[Guidance Overview] IRS Issues New Form 8928 on Excise Taxes for Failures to Comply with HSA Comparability, COBRA, HIPAA, and Other Group Health Plan Mandates
Excerpt:"EBIA Comment: This Form's publication likely signals increased focus on excise tax assessment for noncompliance with these various mandates. To help keep the excise tax risks to a minimum, cautious plan sponsors (and others, like TPAs and insurers, who may be liable) will follow an approach to compliance designed not only to prevent mistakes from happening but also to catch and correct the ones that inevitably fall through the cracks."(Employee Benefits Institute of America)

[Guidance Overview] Health Savings Accounts Information: Updated for 2010 (PDF)
3 pages. Two-page chart with questions and answers on HSAs. (Council for Affordable Health Insurance)

[Guidance Overview] Excise Tax Reporting for HIPAA, COBRA and HSA Violations
Excerpt:"HIPAA, COBRA and certain other laws include excise tax penalties for violations and similar excise tax provisions apply to certain health savings account (HSA) and medical savings account (MSA) contributions. Employers have had little guidance on reporting or paying these excise taxes, but final IRS regulations issued in September 2009 fill that void, describing who is responsible for paying the tax, and how and when to report violations."(Mercer LLC)

Important Dates to Remember in the First Quarter of the Year
Examples: HITECH Act Takes Primary Effect, February 17, 2010; DoDAA Grace Period Extension Period Ends, February 17, 2010; Penalties for HITECH Act Breach Notice Violations Begin, February 22, 2010. (Infinisource)

2009 Versions of HSA Reporting Form 8889 and Publication 969
Excerpt:"EBIA Comment: The absence of significant changes in these 2009 releases is what we expected, given that the rules governing HSAs, HRAs, and health FSAs have remained relatively stable this year. It will be interesting to see what changes may emerge in 2010 as part of any health care reform proposals that may be enacted, and to see whether the final cafeteria plan regulations will be issued."(Employee Benefits Institute of America)

[Guidance Overview] Decrease of 7.5 Cents in 2010 Mileage Rate for Transportation to Obtain Medical Care or as Part of Deductible Moving Expenses
Excerpt:"EBIA Comment: Transportation expenses that are deductible medical expenses under Code Section 213 generally form the basis for tax-free transportation benefits under a health FSA, HRA, or HSA. To simplify administration, some employers'health FSAs or HRAs exclude medical transportation expenses from the list of reimbursable items; if not excluded, such expenses may be reimbursed by health FSAs or HRAs at the 16.5 cents per mile rate for 2010. HSA account holders can also choose to use the standard mileage rate to calculate the tax-free distribution that they can take for medical transportation expenses that meet the Code Section 213 definition of medical care. But remember, the new rate doesn't apply until 2010."(Employee Benefits Institute of America)

[Guidance Overview] IRS's 2009 Version of Pub. 502 on Medical and Dental Expenses
Excerpt:"EBIA Comment: Pub. 502 provides valuable guidance on what qualifies as a medical expense under Code Section 213(d), and thus, certain information about which expenses can be reimbursed or paid by health FSAs, HSAs, or HRAs. However, using Pub. 502 to determine what expenses are reimbursable under these tax-favored vehicles must be done with caution, because Pub. 502 addresses only what expenses are deductible -- -it doesn't describe the different rules for reimbursing medical expenses under health FSAs, HSAs, or HRAs."(Employee Benefits Institute of America)

What Do We Know About Enrollment in Consumer-Driven Health Plans?
Excerpt:"This article summarizes the literature on CDHP offer rates and enrollment. The percentage of employers offering CDHPs has gone from virtually none in 2000 to 12 percent in 2009. Based on the various sources of data on enrollment in health reimbursement arrangements (HRAs) and HSA-eligible plans, it appears that 15?19 million people were enrolled in these plans in 2009, representing 9?11 percent of the privately insured market."(Employee Benefit Research Institute (EBRI))

[Guidance Overview] ITS Regulations on Employer Comparable Contributions to HSAs
Excerpt:"The regulations also address comparability rules for qualified HSA distributions, which are direct distributions from health flexible spending accounts (FSAs) or health reimbursement accounts (HRAs) to HSAs. If an employer offers qualified HSA distributions to any employee, the employer must offer such distributions to all employees who qualify as eligible individuals under any HDHP. Conversely, an employer may offer qualified HSA distributions to eligible individuals enrolled under the employer's HDHP but not to eligible individuals who are not enrolled in the HDHP. The final regulations on HSA comparable contributions apply to employer contributions made on or after Jan. 1, 2010."(Watson Wyatt Worldwide)

Research Shows Employers That Adopt Consumer-Driven Health Plans Favor Health Saving Accounts As Key Funding Option
Excerpt:"The analysis is based on survey results of 370 employers polled in the summer of 2009. In the issue brief titled'CDH plans shift to HSAs', researchers report that 44% of employers offer a CDH plan to their workers, a slight fall from 2008 (45%) but up from 28% in 2006."(Employee Benefit News; free registration required)

Employers Prefer HSAs in CDHP Offerings, According to Survey
Excerpt:"Among employers who offer a consumer-driven health plan (CDHP), health savings accounts (HSAs) continue to be the preferred funding choice, according to a survey by Aon Consulting and the International Society of Certified Employee Benefit Specialists. Of the 370 survey respondents, 44% of employers currently offer a CDHP to employees - similar to last year, according to a press release. Of those offering CDHPs this year, 56% are now using the HSA model, 35% are using the Health Reimbursement Arrangements (HRA) model, and 9% use both. Over the last three years, the gap has widened between HSAs and HRAs, as the number of employers offering HSAs has gone from 48% to 56%, and the number offering HRAs has dropped from 43% to 35%."(PLANSPONSOR.com; free registration required)

Research Shows Attaching a Debit Card to an HSA Is Key Driver of Enrollment
Excerpt:"The debit card'adoption and use continue to grow and grow rapidly,'says Jody Dietel, a compliance officer at WageWorks, a San Mateo, Calif.-based firm that administers flexible spending accounts, health savings accounts, health reimbursement arrangements and health care cards.'The technology is increasing and improving rapidly. [The debit cards] continue to be a widely adopted and widely appreciated tool for consumers.'"(Employee Benefit News; free registration required)

Employers Drop, Shift Contributions to Consumer-Directed Health Plans
Excerpt:"[E]mployees with family coverage in a CDHP saw their employer contributions rise this year. The percentage of workers with CDHP family coverage receiving an employer contribution of at least $1,000 stood at 79% in 2009, up from 59% in 2008. The share of the adult population enrolled in account-based health plans remains small and growing slowly, the survey confirmed. In 2009, 4% of adults with health insurance were enrolled in an HRA or had a high-deductible plan with an HSA . . . ."(Employee Benefit Adviser; free registration required)

Availability, Contributions, Account Balances, and Rollovers in Account-Based Health Plans, 2006?2009
Excerpt:"The share of the adult population with private health insurance enrolled in account-based health plans (so-called'consumer-driven'health plans, or CDHPs) remains small but continues to grow. In 2009, 4 percent of the adult population with private health insurance was enrolled in an health reimbursement arrangement (HRA) or had a high-deductible plan with an health savings account (HSA), up 1 percentage point from the previous year."(Employee Benefit Research Institute (EBRI))

[Guidance Overview] New Treasury Regulations Require Group Health Plans to Self-Report Excise Tax Liability
Excerpt:"Beginning January 1, 2010, plan sponsors (plan administrators for multiemployer plans) will need to self-report excise tax liabilities for failure to meet certain health plan requirements, including requirements under: * COBRA; * HIPAA's portability and nondiscrimination rules; * Newborns'and Mothers'Health Protection Act; * Mental Health Parity and Addiction Equity Act; * Health savings account comparability provisions; * Michelle's Law; * Genetic Information Nondiscrimination Act (GINA)"(Ballard Spahr)

[Guidance Overview] Chart of 2009 and 2010 Retirement Plan and Other Inflation‑Adjusted Benefits (PDF)
3 pages. Also included are transportation and adoption benefits. (Seyfarth Shaw LLP)

GM Salaried Staff Get Only Consumer-Driven Health Plans
Excerpt:"General Motors Co. will offer only high-deductible consumer-driven health care plans to its 24,000 salaried employees, effective Jan. 1. GM salaried employees will choose from two plans, both linked to health savings accounts. Under one plan, the deductible will be $1,300 for single coverage and $3,100 for family coverage, with a maximum annual out-of-pocket expense of $2,200 for those with single coverage and $5,000 for family coverage. Employees will pay monthly premiums ranging from $5 for those with single coverage and $15 for those with family coverage. In the other CDHP, deductibles also will range from $1,300 to $3,100, but GM will cover all eligible in-network expenses after the deductibles are met. The monthly premiums for that plan will range from $25 for individual coverage to $75 for those with family coverage."(Business Insurance)

[Guidance Overview] New IRS Considerations Regarding Over-the-Counter Items as Medical Care Expenses
Excerpt:"While the IRS guidance adds some certainty, it also reminds us that for many over-the-counter items, reimbursement cannot be automatic. If you decide to cover the expenses of dual-purpose items as part of your FSA or HRA benefit program, you must ask questions necessary to verify that those expenses are reimbursable medical expenses."(Warner Norcross&Judd LLP)

[Guidance Overview] 2010 Benefit Limits
Excerpt:"The Service has also released health and fringe benefit plan adjustments effective January 1, 2010."(Kilpatrick Stockton LLP)