HEALTH CARE REFORM: FEW CHANGES FOR HEALTH SAVINGS ACCOUNTS

Health Care Reform: Few Changes for Health Savings Accounts

Individuals with Health Savings Accounts (HSAs) will not be greatly affected by the recent enactment of the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Tax Credits Reconciliation Act of 2010. Following are the main changes to HSAs:

• A change in the definition of a "qualified medical expense" that impacts reimbursements and withdrawals under HSAs. Beginning with 2011, expenses incurred for over-the-counter (OTC) medications without a prescription will no longer be eligible for payment or reimbursement from an HSA.

• An increase in the tax penalty on HSA withdrawals that are not used for qualified medical expenses will be increased from the current 10 percent to 20 percent in 2011.

Some of the new law's provisions will have an impact on High Deductible Health Plans (HDHP) sold in the future. As the regulations are further defined, we will continue to provide updates on how they will affect you and your Health Savings Account. To learn more about the provisions in these two Acts visit: www.kff.org/healthreform/upload/housesenatebill_final.pdf