The Health Insurance Portability and Accountability Act of 1996 established a demonstration to test and evaluate the feasibility of Medical Savings Accounts.
The demonstration was created as a pilot-program in order to be able to introduce a program without creating widespread, irreparable harm to the participants or the insurance market as a whole.
Participation in the demonstration was limited to no more than 750,000 participants who are either employees of small businesses (businesses with 50 or fewer employees) or self-employed individuals.
Many of the rules governing use of MSAs during the demonstration were designed to assure that these tax-advantaged savings accounts were used largely for the purpose of obtaining medical care and would not become a general-purpose tax shelter.
MSA proponents attribute the lack of popularity of MSAs during the demonstration period in part to various safeguards included in the demonstration legislation that were intended to prevent abuse of the accounts. Almost as soon as the demonstration was put in place, bills were introduced in Congress to relax the safeguards.
The MSA was renewed through 2003. While it was not renewed for 2004, the HSA legislation passed in December incorporated the basic MSA structure, but also included many of the changes that the bills recommended such as 100% funding of the deductible, shared contributions and broadening the people that are eligible for the plans.
What is an HSA?
Why an HSA?
Who is eligible for an HSA?
Is an HSA right for everyone?
Do I need a certain type of Insurance Plan?
Do I need a certain type of account?
Employer Benefits of HSA Plans
Employee Benefits of HSA Plans
HSA Tax Treatment
Tax Treatment: Inviduals
Tax Treatment: Employer Contributions
How are Distributions Taxed?
Who May Contribute?
How much may be contributed to an HSA in calendar year 2006?
Tax Treatment of Contributions
What are catch up Contributions?
What are “Qualified Medical Expenses?”
Are health insurance premiums qualified medical expenses?
How are claims adjudicated and processed?
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