This is the first of a series of articles on Health Savings Accounts (HSAs). Each month will feature one aspect of the governing regulations.
Health Savings Accounts (HSAs) originated from Medicare Prescription Drug Improvement and Modernization Act of 2003 (referred to as the Medicare Bill). The Act created the rules for HSAs in Code § 223 with an effective date of January 1, 2004. (Thirteen other Code sections were either also created or amended to apply to HSAs.)
Since that time, the IRS has issued:
- IRS Notice 2004-2 (December 22, 2003)
- IRS Notice 2004-23, Rev. Rul. 2004-38, Rev. Proc. 2004-22, and IRS Notice 2004-25 (March 30, 2004)
- Rev. Rul 2004-45 (May 11, 2004)
- IRS Notice 2004-43 (June 18, 2004)
- IRS Notice 2004-50 (July 23, 2004)
- IRS Announcement 2004-67 (Sept 7, 2004) (page 459 of Bulletin No. 2004-36)
- Final version of reporting forms for trustees and custodians of HSAs and Archer MSAs (See article in this month's newsletter.)
Basically, under this Act, an “eligible individual” with a “qualified High Deductible Health Plan (HDHP)” may establish an HSA with “tax-favored contributions” to pay for “qualified medical expenses”. The HSA contributions must be held by a “qualified trustee” in a “qualified trust”.
The terms in quotes in the above paragraph are some of the terms that future HSA Basics articles will explain. However, if you want the answers now, check out www.myHSAtoday.com.
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