Health Savings Accounts and the Latest Notices
Some useful guidance has come out recently on Health Savings Accounts (HSAs) from the IRS so I thought they would be worthwhile to briefly summarize and pass on.
Notice 2008-52 gives us considerable guidance on the impact of amendments to Code Section 303 and 305 as they relates to HSAs. First,there is guidance on determining the maximum contribution limits for years 2007 and later. It is defined as the greater of (1) the sum of the limits determined separately for each month under Section 223(b)(2), based on eligibility for HDHP coverage on the first day of each month, plus catch-up contributions for each month, OR (2) the maximum annual HSA contribution under Section 223(b)(2(A) of (B) based on the individual's HDHP coverage (self or family) on the first day of the last month of the individual's taxable year, plus catch-up contributions, if applicable. For 2008, the self coverage (Section 223(b)(2)(A)) is $2,900. For family (Section 223(b)(2)(B)), the limit is $5,800.
2008-52 is also useful for determining when HSAs may be established and has 15 examples dealing with timing and funding.
Notice 2008-51 provides guidance on qualified HSA funding from an individual's IRA or Roth IRA. Code Section 408(d)(9) generally provides that funding an HSA from an IRA or Roth IRA is not included in gross income, provided eligibility requirements are met. There are maximum amounts of funding that can occur based on the limits established by the Code. Those would include the limits set forth in Notice 2008-52 above. What I found most useful about this notice is explanation of the procedures for making the transfer and the testing for eligibility. The notice provides us with 10 examples of various funding scenarios to test the applicable limits of the funding.
Finally, Rev Proc 2008-29 gives us the limits for 2009 for HSAs and HDHPs. For calendar year 2009, the maximum single contribution will be $3,000. The maximum family contribution will be $5,950. HDHP will be defined as not less than $1,150 for self-only coverage and $2,300 for family coverage. The annual out-of-pocket expenses do not exceed $5,800 for self-only coverage and $11,600 for family coverage.
