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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.
More than half of all small businesses reported they were contemplating changes in their healthcare programs In Small Business Digest's May survey.
Where small business managers see Health Savings Accounts as an avenue to reduce healthcare costs, some experts worry that employees will be hit with higher plan costs.
While the debate rages in Washington and elsewhere over the issue of healthcare and its effect on hiring, small business owners themselves indicated it was a major concern but not preventing them from hiring.
Following three consecutive years of double-digit inflation, conditions are ripe for an alternative to today’s mainstream health plan offerings.
In recent surveys, almost half of all small businesses reported they were contemplating changes in their healthcare programs. In almost every case, managers said they would be shifting more of the costs to employees.
Even if they’re ailing, smaller firms often encourage workers to come in, but that may not be the best thing to do.
Some of the nation’s top healthcare researchers are saying what many small businesses owners have long suspected—small firms pay more for less in terms of health insurance.

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