In the situations described below, may an individual make contributions to a Health Savings Account (HSA) under section 223 of the Internal Revenue Code if the individual is covered by a high deductible health plan (HDHP) and also covered by a health flexible spending arrangement (health FSA) or a health reimbursement arrangement (HRA)?
The Treasury Department and IRS on Tuesday issued a revenue ruling clarifying how people can contribute to Health Savings Accounts (HSA) while also being covered by certain types of employer-provided health reimbursement plans, Dow Jones reported.
The IRS issued guidance on the interplay between health savings accounts (HSAs) and health flexible savings arrangements (health FSAs) or health reimbursement arrangements (HRAs). Code Sec. 223 allows a deduction for contributions to an HSA for an "eligible individual," defined as an individual who is covered under a high-deductible health plan (HDHP). An eligible individual may not be covered by a health plan that is not an HDHP, unless that health plan provides only permitted insurance, permitted coverage or preventive care as defined in Code Sec. 223(c)(1)(B). Health FSAs and HRAs are generally health plans that are not HDHPs and, therefore, an individual covered by such a plan is generally not eligible for HSA contribution deductions.
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