In an attempt to make health insurance and health savings accounts more attractive to consumers and businesses, Congress has revised HSA legislation for 2007. The new laws make HSA’s for individuals, families and business more beneficial which may likely increase the popularity of these plans. The intended result might be that more Americans purchase high deductible health insurance/HSA plans over traditional insurance. The affordability of these plans could decrease the number of uninsured consumers across America.
1. Account Holders Can Contribute More Funds
HSA contributions are no longer limited by the deductible of the health insurance policy. Individuals account owners can contribute up to $2,850 while families can deposit up to a maximum of $5,650. Additionally, deposits are no longer limited by the 1/12th systematic contribution rule. Account holders can deposit the maximum allowance in a lump sum no matter when they purchased their insurance plan.
2. Account Holders May Transfer Tax Deferred Funds From an IRA to HSA
Account owners can now make a lump sum distribution from a qualified plan like an IRA, (Individual Retirement Account). This would not be considered a taxable event by the Internal Revenue Service. This way funds will be available immediately for qualified medical expenses.
3. Employer/Employee Account Holders May Fund with Lump Sum Deposit
Employers and Employees may make the same type of one time contributions from a qualified account such as a FSA (Flexible Spending Account), HRA (Health Reimbursement Arrangement) or an IRA. This will be appealing to employers who are switching over from traditional plans. Again, funds will be available immediately for medical expenses
These are the main benefits of the new legislation. They should make Health Savings Accounts less complicated to purchase and maintain for individuals, families and businesses. Additionally, increased contribution limits and funding options will allow consumers to save more for qualified health expenses.
By: Adam Hyers
