Health Savings Accounts

Health Savings Accounts (HSAs) were created in 2003 in the Medicare Modernization Act, Public Law 108-73. On January 1, 2004 the first HSAs were opened under new regulations to help banks understand how to treat these new accounts. 

Treasury and the Department of Labor (DOL) provided additional guidance, through "Frequently Asked Questions" (FAQs), Fact Sheets, and Private Letter Rulings. The banking industry is asking for more detailed answers to the questions that remain. It is also looking to Congress to provide technical fixes to the current law and to legislate expansion of HSAs.

For more information, visit the ABA's HSA Council section. This site has current news; a biweekly newsletter, the "HSA Update"; legislative analysis; market information and more.

Legislative / Regulatory

  • In Notice 2007-22, Treasury released the first piece of guidance interpreting the Tax Relief and Health Care Act of 2006.  The guidance outlined the requirements needed to effect the rollover of funds from an existing Flexible Spending Account (FSA) or Health Reimbursement Arrangement (HRA) into an individual's HSA.  Of note, the guidance clarified that the length of time an individual would be required to retain High Deductible Health Plan (HDHP) coverage is 12 months following the funds transfer from an FSA or HRA into an HSA.
  • The Tax Relief and Health Care Act of 2006 was passed by the Senate on the last day of the lame duck session. It made some technical fixes to HSAs based on bank, employer, and participant experience. Two of the provisions were highly requested by ABA's HSA Council. One provision was included that repeals the annual deductible limitation on HSAs.  Another provision removes the 1/12th rule for contributions.  Here is a summary and a technical explanation of all the provisions. 
  • Field Assistance Bulletin 2006-02 is a list of Frequently Asked Questions where the Department of Labor (DOL) addresses ERISA concerns stemming from non-employee deposits to HSA Accounts and other issues that might subject an employer to Title I liability under ERISA.
  • Chairman's Mark to the Health Opportunity Patient Empowerment Act of 2006: The Ways & Means Committee passed this bill in October of 2006.  Here is a summary of the bill.
  • Health Opportunity Patient Empowerment Act of 2006: This bill was introduced in September of 2006 to bring together provisions from Representatives Cantor's and Ryan's bills as well as the concepts that Chairman Thomas of Ways & Means wanted to address. See the Congressional Budget Office (CBO) Cost Estimate for budget impact information.
  • HSA Improvement and Expansion Act of 2006: This Senate bill was introduced in June 2006. This is an explanation of its provisions.
  • Tax-Free Healthcare Savings, Access, and Portability Act: This Senate bill was also introduced in June 2006, and is very similar to the Tax-Free Health Savings Act, below. It would help to make HSAs even more affordable and attractive. This is an explanation of its provisions.
  • Tax-Free Health Savings Act: This House bill was introduced in May 2006.  It would help to make HSAs even more affordable and attractive. This is an explanation of its provisions.
  • S. 2585 was introduced in April 2006. It would allow the death the benefit received by military family members to be rolled into tax free savings accounts, including HSAs.
  • HR 4511 was introduced in the US House of Representatives in December 2005. The bill would allow employers to provide Health Savings Accounts (HSAs) and also allow Health Reimbursement Arrangements (HRAs) and Flexible Spending Accounts (FSAs) to cover amounts below the deductible.
  • Pension Reform Bill: H.R. 2830 has a provision that would allow rollovers of FSA dollars into HSA accounts. (June, 2005)
  • ERISA Treatment of HSAs: Field Assistance Bulletin 2004-1 describes the circumstances under which HSAs are considered outside of Title I of ERISA. For further information on ERISA treatment of HSAs, please contact Lisa Bleier, Senior Counsel, ABA Center for Regulatory and Trust Affairs. The bulletin arrives at the conclusion that, because accounts belong to and are controlled by employees, they do not fall under ERISA. This can also be found at the DOL website.
  • FDIC Deposit Insurance: Questions have arisen about how FDIC insurance will work with HSA's. Here is the response from the FDIC. (April 28, 2004)
  • Medicare Modernization Act, Public Law 108-173: This is the law that allowed the formation of qualified high-deductible insurance policies and Health Savings Accounts. The link is a pdf of the section pertaining to HSA's in Title XII.
  • SEC Proposed Regulation B  This was proposed by the SEC to implement Title II of the Gramm-Leach-Bliley Act of 1999, PL 106-102.  Regulation B as written may affect the ability of HSA account owners to invest their funds at the institution of their choice. Read our talking points to understand how Reg B could affect HSA product offerings.

Press Releases

ABA Resources

  • Web site for ABA's HSA Council.  This site has current news; a biweekly newsletter, the "HSA Update"; legislative analysis; market information and more.

Additional Information

Questions? Please contact Renee Galbraith for more information.