NU Online News Service, March 31, 2004, 6:11 p.m. EST – The Internal Revenue Service has made good on earlier promises to rush out a second batch of guidance on health savings accounts.[@@]
President Bush brought HSAs to life Dec. 8, 2003, when he signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003. One MPDIMA section lets eligible taxpayers who buy high-deductible health insurance policies exclude HSA contributions from taxable income and spend HSA cash on qualified expenses without paying income taxes on the distributions.
The high-deductible health insurance policies can offer special low-deductible coverage for certain types of preventive care.
One document in the new round of guidance, IRS Notice 2004-23, describes the kinds of services that sellers of HSA-compatible policies can treat as preventive care.
Other documents, Notice 2004-25, Revenue Ruling 2004-38 and Revenue Procedure 2004-22, create "transition relief" rules and procedures for taxpayers who have low-deductible prescription drug benefits or have a hard time finding custodians willing to take HSA assets.
Notice 2004-23 establishes a safe harbor for preventive care benefits.
In most cases, insurers that sell HSA-compatible policies can treat annual physical exams, immunizations, routine screening services, routine prenatal care, routine well-child care, tobacco-cessation programs and weight-loss programs as preventive care, the IRS says.
The IRS is asking for public comments about whether insurers should be able to treat wellness programs and mental health programs as preventive care programs.
