General Information on Personal Care Accounts 

Sen. Hatch's 2011 Family & Retirement Health Investment Act - May 26, 2011 - Orrin Hatch Press Release

U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, today unveiled the Family and Retirement Health Investment Act of 2011, bicameral legislation to strengthen and expand Health Savings Accounts (HSAs) and Flexible Spending Arrangements (FSAs) for American workers and retirees. Companion legislation was introduced in the U.S. House of Representatives by U.S. Rep. Erik Paulsen (R-Minn.). Specifically, the legislation will:  

IRS Regulations on HSA, HRAs, & FSAs: Detailed descriptions and examples. 

Health Savings Accounts

2011 IRS HSA Notice:  Rev. Proc. 2010-22   SECTION 1. PURPOSE

This revenue procedure provides the 2011 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under § 223 of the Internal Revenue Code. The amounts for 2011 are unchanged from the amounts for 2010 because, after the application of the cost-of-living adjustment rules of § 223(g) (including the rounding rule of § 223(g)(2)), the changes in the Consumer Price Index for the relevant period do not result in changes to the amounts for 2011.

2011 HSA Plan Limits (BCBS):  2011 HSA Cost of Living Adjustments (COLA’s) Although the Treasury will not officially release the 2011 COLA-adjusted HSA minimum deductible, maximum out-of-pocket, and the single and family contribution amounts until June 1st it is possible to calculate anticipated amounts now that the March CPI has been released. Listed below is a brief description of the rules for calculating the COLAs followed by some illustrations for calculating the 2011 COLA-adjusted HSA minimum deductible, maximum out-of-pocket, and the single and family contribution amounts.

HSA Structure 2009 2010 2011
Min Individual Deductible $1,150 $1,200 $1,200
Min Family Deductible $2,300 $2,400 $2,400
Max Individual OOP $5,800 $5,950 $5,950
Max Famil OOP $11,600 $11,900 $11,900
Max Individual Contribution $3,000 $3,050 $3,050
Max Family Contribution $5,950 $6,150 $6,150

 

HSA FAQ:  IRS Notice 2004-50 PURPOSE: This notice provides guidance on Health Savings Accounts.  Notice 2004-2, 2004-2 I.R.B. 269, provides certain basic information on HSAs in question and answer format.  This notice addresses additional questions relating to HSAs.

 

Health Reimbursement Arrangements

Original HRA IRS Announcement: Today, June 26, 2002 the Treasury Department and the Internal Revenue Service issued guidance that clarifies the tax treatment of health reimbursement arrangements (HRAs) in which the employee’s health benefit arrangement provides for employee-controlled reimbursement of medical costs. "With this new guidance, we clear the way for employers to adopt health plans with patient-directed features so that employees have more choice and greater control over their health care coverage," stated Treasury Secretary Paul O'Neill.

HRA  Part I. Rev. Rul.  2002- 41 ISSUE:  Whether employer-provided coverage and medical care expense reimbursements made under a reimbursement arrangement that allows unused amounts to be carried forward, as described in Situations 1 and 2 below, are excludable from gross income under §§ 106 and 105 of the Internal Revenue Code, respectively.

HRA Part III.  Notice 2002-45  PURPOSE:  This notice provides basic information about a type of employer-provided health reimbursement arrangement (HRA) described below.  Published elsewhere in this bulletin is a revenue ruling providing guidance involving an HRA.

HRA IRS Ruling on HRA Income: Employees in an employer-provided Health Reimbursement Arrangement (HRA) where the employer reimburses workers for certain medical expenses don’t have to count the reimbursement as income.

HRA Wellness Ruling:  This document contains final rules governing the provisions prohibiting discrimination based on a health factor for group health plans and issuers of health insurance coverage offered in connection with a group health plan.

  

Flexible Spending Accounts

 

 For information on the interaction between a health FSA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier. What are the benefits of an FSA? You may enjoy several benefits from having an FSA.

 Contributions made by your employer can be excluded from your gross income.

 No employment or federal income taxes are deducted from the contributions.

 Withdrawals may be tax free if you pay qualified medical expenses. See Qualified medical expenses, later.

 You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account.

Health FSAs are employer-established benefit plans. These may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan. Employers have complete flexibility to offer various combinations of benefits in designing their plan. You do not have to be covered under any other health care plan to participate.

 

Self-employed persons are not eligible for an FSA. Certain limitations may apply if you are a highly compensated participant or a key employee.

IRS Guidelines for Qualified Medical Expenses (QME):  Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. They also include dental expenses.  Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. 

Medical expenses include the premiums you pay for Internal Revenue Service insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract.