Health Care Reform and HSAsTip Date: 2010-04-16
As President Obama has signed into law far-reaching healthcare financing legislation, we wanted to provide 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 for 2011:
Qualified Medical Expenses: Starting January 1, 2011 you will no longer be able to pay for over-the-counter medications from your HSA as a qualified medical expense. Until the end of this year, you can reimburse yourself or pay from your HSA the money used to buy over-the counter medications. 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 nonqualified 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%. |
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