'07 HSA Changes: A Recap

As we reported last month, a number of (mostly positive) changes are on tap for Health Savings Accounts (HSA’s). Here’s a brief summary:

· Folks can make a one time transfer from their IRA to their HSA.

· They can also make a one time rollover from their FSA and/or HRA.

· In general, the FSA grace period no longer impacts HSA eligibility.

· Maximum annual contribution limitations are more generous, and aren’t based on HDHP (High Deductible Health Plan) deductibles or IRS limits.

· Perhaps the most significant change is that, in most cases, contributions don’t have to be pro-rated when you start an HDHP mid year. This is really helpful for folks who want to make the switch in, say, September, but are intimidated at the major deductible (and paltry HSA contributions allowance) facing them so late in the year.

· Employers can contribute to more to non-highly compensated employees without running afoul of HSA comparability rules.
There are one or two other changes, as well.

On the downside, Vimo (a comparison-shopping portal for healthcare products and services) reports a significant gap between the number of people enrolled in HDHP’s and those who’ve set up Health Savings Accounts. They’re also concerned that the amount of money actually on deposit in these accounts represent half of the potential out-of-pocket exposure. For some reason, Vimo is concerned that these “findings hint at disturbing trends that may jeopardize the Consumer-Driven Health movement."

Me, I don’t see it. First, just because the money isn’t in the HSA doesn’t mean it’s not available. And a lot of folks also use their accounts on a fairly fluid basis, moving funds in and out as claims occur. Finally, it ignores the fact that there were significant limits on the amount of money that could be put into those accounts, which limits are now greatly reduced.

Looks like clear skies to me.