HSA Rules Improved by Congress for 2007 

On December 9, 2006, Congress passed H.R. 6111 (the "Act") which includes various improvements to Health Savings Account (HSA) rules. These new provisions are effective January 1, 2007. Some of the changes include:

• Elimination of the "lesser of" deductible and statutory limit contribution rule. HSA contributions can now be made up to the full statutory maximum (based on self-only or family coverage) without regard to the individual's high deductible amount.
• Allows full-year contributions for individuals who enroll in a high deductible health plan mid-year. Previously, the monthly limits were 1/12 of the maximum annual contribution amount.
• Allows a one-time tax free rollover of Health FSA and/or HRA amounts, provided certain conditions are satisfied. (This provision expires on January 1, 2012.)
• Eliminates the negative impact of a Health FSA 2 1/2 month grace period on HSA eligibility for a Health FSA participant that has a zero balance on the last day of the plan year.
• Allows the employer to contribute contributions that are greater for non-highly compensated employees without violating the HSA comparability rule.