The most comprehensive guidance yet addressing health savings accounts has been released by the Treasury and the IRS as announced in a press release. The guidance issued–IRS Notice 2004-50–is in a Q & A format. Among the items clarified by the guidance are the following:
• Benefits under employee assistance plans, disease management plans and wellness programs generally do not disqualify an otherwise eligible individual from contributing to an HSA.
• Mistaken distributions from an HSA can be repaid to an HSA without penalty or tax.
• Generally, the FSA-type salary reduction rules do not apply to HSA salary reduction contributions, which generally follow the more flexible 401(k) type rules allowing changes in elections throughout the year as long as any election is effective prospectively.
• Payments by individuals due to traditional benefit limits that are part of reasonable plan designs do not count against the out-of-pocket maximums.
• Employer matching contributions made through a cafeteria plan are not subject to the comparability requirements.
• Account fees paid from HSAs are nontaxable distributions; account fees paid outside of the HSA directly to trustees are not treated as contributions.