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Rollovers From
FSAs into HSAs
“Health Savings Accounts are
improving the way Americans obtain the care they need. This bill makes
HSAs more flexible and makes it easier for participants to put money
aside for their personal health care,” said Treasury Assistant Secretary
for Tax Policy. Health Savings Accounts have been growing in popularity
over the last few years due in part to the focus being placed on
accessibility and affordability. Health Savings Accounts are indeed
improving the way Americans obtain the care they need. Health Savings
Accounts are making receiving healthcare an actuality rather than a
distant hope.
Benefits afforded to those
participating in Health Savings Account programs far outweigh those of
traditional insurance plans. Traditional insurance plans often times
provide its employees with Flexible Spending Accounts, FSAs or a Health
Reimbursement Account, HRA. While Health Savings Accounts are
drastically different from traditional policies, you are able to
transfer funds from a FSA or an HRA. If you are currently participating
in an FSA or a HRA and have decided to enroll in a Health Savings
Account, your employer can transfer funds from your FSA or HRA into your
Health Savings Account up to the yearly maximum*. Health Savings
Accounts were developed to meet the needs of the consumer. By allowing
funds previously accrued to be transferred into your Health Savings
Account the issue of access and affordability of healthcare is being
addressed.
Health Savings Accounts were also
established on a tax-free basis. Meaning, funds deposited into a Health
Savings Account are tax-free if spend on qualified medical expenses.
When transferring funds from an FSA or an HRA the amount deposited will
fall under the same guidelines as funds deposited in the future.
Health Savings Accounts provide
it’s policyholders with a comprehensive policy, but also provides the
individual with the means to utilize contributions from other eligible
accounts.
*
The maximum
contribution is the balance in the FSA or HRA as of September 21, 2006,
or if less, the balance as of the date of the transfer. The provision is
limited to one distribution with respect to each health FSA or HRA of
the individual. If an individual does not remain an eligible individual
for the 12 months following the month of the contribution, the
transferred amount is included in income and subject to a 10 percent
additional tax.
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