Due to the enactment of the National Health Law (PPACA – Patient Protections and Affordable Care Act) beginning January 1, 2011 the following changes will affect Health Savings Accounts:
- The Excise Tax on ineligible HSA reimbursements increases from 10% to 20%. This is in addition to the normal income taxes for an ineligible HSA reimbursement.
- Over the Counter (OTC) medicine or drugs (i.e. Tylenol & Claritin), with the exception of insulin, are no longer eligible to be reimbursed from an HSA unless you have a doctor’s prescription.
What exactly is considered an OTC medicine or drug? Below are abbreviated lists of OTC items that will be eligible for reimbursement, broken out into whether or not a prescription is or is not required. This list is not comprehensive. It is intended to be a reference guide until further guidance from the federal government is issued:
NO PRESCRIPTION REQUIRED: bandages, birth control, blood pressure monitors, braces and supports, catheters, contact lenses supplies, denture adhesives, diagnostic testing devices and monitors, elastic bandages and wraps, first aid supplies, insulin and diabetic supplies, ostomy products, reading glasses, wheelchairs, crutches, walkers and canes.
PRESCRIPTION REQUIRED: acid controllers, allergy and sinus medicines, antibiotics, anti-diarrhea medicines, anti-gas medicines, anti-itch and insect bite medicines, anti-parasitic treatments, baby rash ointments and creams, cold sore remedies, hemorrhoid preps, laxatives, motion sickness medications, pain relief medicines, respiratory treatments, sleep aids and sedatives, stomach remedies.
For more information, visit the IRS website at http://www.irs.gov/newsroom/article/0,,id=227308,00.html
2011 HSA Contribution Limits
In May of 2010 the IRS published Revenue Procedure 2010-22, which provides the 2011 cost-of-living contribution and coverage adjustments for HSAs (health savings accounts) as required under Code Section 223(g). The amounts for 2011 are unchanged from the amounts for 2010 because, after the application of the cost-of-living adjustment rules of § 223(g), the changes in the Consumer Price Index for the relevant period do not result in changes to the amounts for 2011.
2011 HSA Maximum Contribution Limit
- Self-only $3,050
- Family $6,150
2011 HSA Catch-Up Contribution Limit
- $1,000
2011 HDHP Minimum Annual Deductible
- Self-only $1,200
- Family $2,400
2011 HDHP Out-of-Pocket Maximum
- Self-only $5,950
- Family $11,900