Thursday, September 2, 2010

HSA rule changes effective in 2011

The enactment of the Patient Protection and Affordable Care Act (PPACA) is expected to have little impact on Health Savings Accounts (HSAs), except for the following changes:

Reimbursement for over-the-counter drugs and medicines
Beginning January 1, 2011, the list of qualified medical expenses for HSAs will exclude over-the-counter drugs unless the drug is a prescribed drug or insulin.

Additional tax on HSA distributions used for ineligible expenses
Beginning January 1, 2011, the additional tax on disbursements from HSAs that are not used for qualified medical expenses will be increased from 10% to 20% of the disbursed amount.

For more information, please refer to our previous post: Health reform to restrict the use of FSA, HRA and HSA funds on over-the-counter drugs.

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