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HSAs and Health Reform


I have an HSA, the bulk of which consists of contributions from my employer (pre-tax, I believe). My plan has been not to spend this money if I can help it, and wait to use it until I am retired. Sort of like a retirement health savings account, you might say. Here's my question:
I've heard that the new Health Care Reform package adds new taxes associated with HSAs (I think I heard something about 10-15%). Problem is, I've been unable to find out specifically what these taxes consist of or how they work. I did see something about not being able to use the money for over the counter things like aspirin or bandaids anymore. Does anyone know how the new Health Care Reform affects HSAs?
Reply to
iarwain

Not a new tax, but an increase in an existing tax - if the HSA is used for nonqualifed expenses, then the penalty is increased from 10% to 20%. (2011)
There's also a new Medicare tax in the reconciliation bill. It applies to unearned income (dividends, interest, capital gains, etc.) for individuals with income over $200K and couples over $250K. (2013) Bloomberg reports that this does not apply to retirement plans, so (assuming they are correct) it likely doesn't apply to HSAs either. Haven't yet dug through the text of the bill yet to verify.
Over-the-counter items will no longer qualify as HSA or FSA expenses, unless accompanied by a doctor's prescription. (2011)
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Mark Freeland snipped-for-privacy@nyc.rr.com
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Reply to
Mark Freeland

HSAs also play into the Cadillac tax on employer plans. Specifically, HSA contributions made by the _employer_ are included in the total amount of employer medical plan payments.
Another good reference - Deloitte. Here's their 40 page writeup on the tax provisions of the Patient Protection and Affordable Care Act and their estimate of the reconciliation bill terms (at the time of their writing, the first cut had passed the House).
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Mark Freeland snipped-for-privacy@nyc.rr.com
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Reply to
Mark Freeland

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