Health Savings Accounts: 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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