HSA Colorado Health Savings Account

CO HSA Health Savings Account Information, Services

Latest HSA Updates

December 11, 2006

109th Congress Expands Health Savings Accounts in Final Days

Lake Geneva, WI (PRWEB) December 8, 2006 - The U.S. Congress gave final approval today to H.R. 6111, the "Tax Relief and Health Care Act of 2006" which included provisions expanding Health Savings Accounts (HSAs). The legislation incorporates provisions from H.R. 6134, the "Health Opportunity Patient Empowerment Act of 2006", introduced by Reps. Eric Cantor (R-VA) and Paul Ryan (R-WI), and approved on September 27, 2006 by the House Ways and Means Committee.

"HSAs are still relatively new, but we are already seeing them quickly grow in popularity in the early stages of their existence," said Ways and Means Chairman Bill Thomas (R-CA) on September 27, 2006. "The adjustments in this bill will make HSAs more attractive as Americans consider their health insurance options."

The newly enacted provisions would make several improvements to the already-successful HSA program. A summary of the provisions is provided below.

SUMMARY of HSA Provisions in the
Tax Relief and Health Care Act of 2006


Expands Funding Sources for HSAs

  • Allows an employee a one-time opportunity to roll over unused funds from an existing Flexible Spending Account (FSA) and/or Health Reimbursement Arrangement (HRA) to deposit in their Health Savings Account. Under this bill, employees would have the ability to start an HSA by making a one-time tax-free transfer of FSA and HRA amounts in their accounts as of September 21, 2006 to an HSA which would belong to the employee. The transfer must be made before January 1, 2012.
  • Allows one-time transfers from Individual Retirement Accounts (IRAs) to Health Savings Accounts. The bill allows taxpayers to make a one-time distribution from an IRA to an HSA so HSA funds are immediately available to meet family health needs. The "roll-over" cannot exceed the HSA contribution limit for the year and is subject to the recapture taxes applicable to the part year coverage provision described below.

Expands the Annual Limits on HSA Contributions

  • Repeals the annual deductible limitation on HSA contributions. The bill allows individuals with HSA-qualified policies that have deductibles below the annual contribution limits (currently $2,700 for self-only coverage and $5,450 for family coverage) to contribute up to these maximum amounts each year. Currently, contributions are limited to the policy deductible if below the annual contribution limits.
  • Allows full-year contributions for part-year coverage. The bill would permit taxpayers whose HSA-qualified coverage begins mid-year to make a contribution equal to their policy deductible for the year (or the annual contribution limit, if higher (see above). This will help people who begin their HSA-qualified coverage part way through the year and who are subject to the entire calendar-year deductible by allowing them to make a full annual contribution, rather than pro-rating their contribution for the number of months of HSA-qualified coverage. Taxpayers would be required to maintain a high deductible plan for a full year beginning in the month the HSA begins or pay tax on the contribution and a 10 percent penalty.

Additional Flexibility for Employers to Help Lower Paid Workers

  • Allows employers to make additional contributions for lower-paid workers. The bill provides an exception to the current "comparability rules" that require companies to make equal dollar contributions to all HSA-eligible employees with similar coverage (single or family) and work status (full-time or part-time). This provision will give employers flexibility to provide greater assistance to their lower-paid workers in the form of contributions to their HSA accounts.

Earlier Notification of Cost of Living Adjustment

  • Under current law, the minimum deductible and out-of-pocket limits for HSA-qualified policies, as well as the annual contribution limits are indexed for inflation. The bill requires the Secretary of the Treasury to announce adjustments to the amounts by June 1st of each year. Currently, the adjustments are not announced until November each year. Earlier notification will simplify planning decisions for insurance companies, banks, credit unions, employers, and taxpayers.


HSed.com applauds the House and Senate and urges President Bush to sign this important legislation. "HSAs have helped many Americans find affordable health insurance for the first time," says Roy Ramthun, VP of HSAed.com. "These provisions are simple, common-sense improvements to HSAs that will help more Americans take advantage of the great benefits that HSAs offer. We thank the 109th Congress for completing work on this proposal before it adjourns this year."

Tax Relief and Health Care Act of 2006 - Complete PDF

IRS HSA limits for 2007. The maximum HSA contribution (not including catch-up contributions) will be $2,850 for self-only coverage and $5,650 for family coverage in 2007.

Additionally, the maximum out-of-pocket expense—including deductibles—that employees with single coverage can be required to pay will rise to $5,500, up from $5,250 in 2006, and to $11,000, up from $10,500, for those with family coverage.

The minimum deductible of the high-deductible health insurance plan to which HSAs must be linked will increase to $1,100, up from $1,050, for employees with single coverage, while the minimum deductible for those with family coverage will increase to $2,200, up from $2,100. The new limits reflect increases in the cost of living.


Banks gearing up for health savings account boon

Financial institutions increasingly are offering HSAs to cash in on a projected $75 billion industry.

By Jonathan G. Bethely, AMNews staff. Dec. 4, 2006.

Financial institutions are jumping on the health savings account bandwagon in a hurry.

Nearly 1,100 banks now offer a health savings account, more than three times the number at the end of 2005, according to Information Strategies, a Ridgefield, N.J.-based marketing firm targeting small businesses and operator of HSAFinder.com, an HSA information site.

JoAnn Laing, president and CEO of Information Strategies, said that although larger banking institutions have jumped into the fray, the real growth is happening in smaller banking institutions such as credit unions and regional banks.

"They're starting out small with just a checking account and rapidly building with a credit/debit card or an investment option," Laing said.

The AMA supports HSAs as a way to empower patients to have greater control over their health care decision-making and encourages employers to offer HSAs as one of several insurance options to employees. AMA policy supports innovative approaches to health care coverage, including consumer-driven health plans such as HSAs.

According to America's Health Insurance Plans, more than 3 million Americans have enrolled in HSA policies that combine HSAs with high-deductible insurance plans, triple the number covered in 2005. Employer group coverage is the fastest-growing segment for HSA products, which have grown from 20% of the HSA market in September 2004 to approximately 60% in January, according to AHIP.

PricewaterhouseCoopers Identifies Top Seven Health Industry Trends of '07
Thursday November 30, 8:30 am ET

Predicts Tipping Point for HSAs, Pressure on Pharmaceutical Pricing and More State Action

NEW YORK, Nov. 30 /PRNewswire/ -- The year ahead will be a watershed for the health industries, according to PricewaterhouseCoopers LLP, as health savings accounts reach a tipping point, states act where the federal government hasn't and pressure on pricing amid demand for transparency forces pharmaceutical companies, hospitals and health plans to rethink their strategies. These are among the top issues identified by PricewaterhouseCoopers' Health Research Institute, which today released its report, "The Top Seven Health Industry Trends of '07."

The report also includes findings of a nationwide survey of 1,000 Americans about their perceptions of the U.S. healthcare system. The survey identified significant differences between what the public and industry believe to be key issues, including:

    -- Nine out of ten Americans (90 percent) believe that greed is a major
       reason that U.S. healthcare costs are rising, a greater number than
       those citing drug prices, care for the uninsured, business
       inefficiencies or malpractice costs.
    -- Nearly one-quarter (24 percent) of Americans don't yet believe that
       having an electronic health record will improve the quality of
       healthcare, and four in ten consumers (42 percent) are unsure.
    -- Only one in six (17 percent) agrees that a very important way to reduce
       the cost of healthcare in the United States is for consumers to share
       more of the cost, which is the strategy behind high-deductible health
       plans with Health Savings Accounts.  More than half of those surveyed
       (51 percent) believe that better, more advanced medical technology and
       diagnostics is the answer.

"Every health organization across the health industries is responding to pressure to reduce costs, meet growing demand and do more, better and faster with less," said David Chin, MD, partner and leader of PricewaterhouseCoopers' Health Research Institute. "Our survey, however, found a disconnect between what the American people, policy makers and industry think is wrong with our nation's health system and how to fix it. It appears that consumers may not appreciate the complexity of healthcare as a business, and therefore the industry's messages about itself and the challenges it faces are failing to resonate in the court of public opinion. This disconnect must be addressed before real progress can occur."

PricewaterhouseCoopers has identified the following as the top seven trends in the health industries for 2007, based on its work with leading employers, policymakers, associations, advocacy groups and organizations across the health industries, including hospitals, health systems, physician groups, government and commercial health insurers, pharmaceutical companies and life sciences firms:

    1. States Take the Initiative:  In the presence of federal gridlock,
       states are taking the lead on divisive issues such as stem cell
       research, health insurance coverage for the uninsured and oversight of
       advertising and promotion by pharmaceutical companies.  Responding to
       local social and fiscal concerns, states are developing innovative
       insurance programs, forming public-private partnerships to spur
       innovation and passing legislation to drive greater accountability and
       transparency from hospitals, physicians and pharmaceutical
       manufacturers.  According to PwC, such state-led initiatives will
       likely expand in 2007, but the risk is a patchwork quilt of local
       programs and regulations.
    2. Transparency Could be Revealing:   The demand for transparency around
       pricing, quality measures, safety standards and community benefit is
       being driven by and is supportive of consumer-directed healthcare and
       pay-for-performance.  In 2007, the health industries will focus on
       becoming more transparent, but government, insurers and employers need
       to educate consumers about the availability and use of such
       information.  Providers will need to dedicate more resources to
       reporting, a strategic issue that can no longer be delegated down in
       the organization.
    3. Time to Walk the Talk on Technology:   Developing a digital backbone to
       support electronic health records, interoperability and transparency is
       a national priority, but the public mandate is unclear and the industry
       is struggling with the cost and return on the investment.   According
       to PwC's research, nearly one-quarter (24 percent) of Americans don't
       yet believe that having an electronic health record will improve the
       quality of healthcare, and four in ten consumers (42 percent) are
       unsure.  Progress will take an investment of resources from the
       government and/or the private sector.
    4. Consumers Take the Wheel:  The shift toward consumer-driven healthcare
       as a way to control costs will continue, but the year ahead will be the
       tipping point for HDHPs and HSAs. Insurers, employers, and to some
       extent the government have been proceeding in favor of consumer-
       directed health plans in the absence of strong support from the
       consumers themselves and from strong data on the results of such
       changes in benefits. PwC's consumer research found that only one in
       seven Americans (17 percent) surveyed by PwC thinks that increased
       cost-sharing is a "very important" way to reduce healthcare costs. With
       a critical mass of people now enrolled in these plans, 2007 will be the
       year to see whether they really have results to offer, and for
       consumers to weigh in on what they think of them.
    5. Price Check for Pharmaceuticals: Forty-two blockbuster drugs will lose
       their patents in 2007, opening the door to generic equivalents and
       potentially creating an enormous loss of revenue for brand name
       pharmaceutical manufacturers.  PwC's consumer survey indicates that the
       public is quite aware of and sensitive to drug prices, perhaps due to
       relatively high cost sharing and price transparency of pharmaceuticals,
       relative to other health services.  Nearly three quarters (72 percent)
       of consumers surveyed said they would be willing to take a generic
       versus brand--name prescription drug.  According to PwC, drug pricing
       will come under continued pressure from generics, and pharmaceutical
       companies will have to develop innovative pricing strategies to
    6. Obesity is the New Smoking:  First smoking, now weight. There is a
       culture shift around healthy eating sweeping the United States, as
       evidenced by the number of fast food chains cutting out transfats and
       U.S. companies introducing health and wellness programs.  Two-thirds of
       U.S. adults are overweight, and obesity's impact on chronic health
       problems is stirring healthcare organizations and employers to
       aggressively promote weight loss. Public attitudes have yet to catch
       up: While three in five Americans (61 percent) believe health insurance
       should cost more for smokers, only 40 percent believe it should cost
       more for those who are overweight because of poor lifestyle habits. In
       2007, expect public health campaigns to push the envelope on obesity
       through wellness programs and financial incentives to lead healthier
    7. Small is Big:  The competitive landscape will change as healthcare gets
       smaller, more focused and patient friendly under consumer-directed
       healthcare.  Physicians and hospitals are now competing with retailers,
       several of whom have announced plans to open mini-health clinics within
       their walls.  Consumers like the idea: Four in ten people surveyed by
       PwC (42 percent) said they would seek non-emergency care from a retail
       health clinic.  In addition, large general hospitals are seeing
       competition from increasing numbers of smaller, specialty hospitals,
       surgery centers and outpatient clinics, the result of regulatory action
       overturning the specialty hospital ban. There already are 130 specialty
       hospitals in operation and more under construction, predominantly in
       the South and West.

"Though there is disagreement about priorities, most everyone agrees that our current health system is ailing and isn't sustainable without major changes," said Sandy Lutz, director of PricewaterhouseCoopers' Health Research Institute. "There are a myriad of issues facing health organizations and opportunities for executives to address them, but they need to also focus on closing the gap between how consumers view the industry and how the industry views itself. Healthcare is a people business and must become more consumer- centric. To be sustainable, health organizations must communicate and connect with their customers through innovative approaches and fresh perspectives - beginning in 2007."

A copy of The Top Seven Health Industry Trends of '07 is available at www.pwc.com/healthcare under "Publication/Thought Leadership."

About the PricewaterhouseCoopers Health ResearchInstitute

PricewaterhouseCoopers' Health Research Institute provides new intelligence, perspective and analysis on trends affecting all health-related industries, including healthcare providers, pharmaceuticals, health and life sciences and payers. The Institute is part of PricewaterhouseCoopers' larger initiative for the health-related industries that brings together expertise and allows collaboration across all sectors in the health continuum.

About PricewaterhouseCoopers

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

Source: PricewaterhouseCoopers LLP


CIGNA Finds Consumer-Directed Care Lowers Expenses, Increases Preventive Care

Reprinted from the Nov. 24, 2006, issue of INSIDE CONSUMER-DIRECTED CARE, a biweekly newsletter with timely news and insightful analysis of benefit design, contracts, market strategies and fina

The latest consumer-directed health study from a large health insurer confirms what previous studies have found: CDH enrollees tend to receive more preventive care and typically have lower utilization rates than do those enrolled in more traditional managed care plans.

This month, CIGNA Corp. released a study based on an analysis of 38,200 members (from 44 employer groups) who were enrolled in a CIGNA HMO or PPO in 2004 and migrated to a CDH plan in 2005. The vast majority (86%) were enrolled in an HRA-based plan, while 14% had an HSA-based plan. Trend comparisons were made to a "control" population of nearly 232,000 HMO and PPO enrollees from the same employer populations. Recent studies from Aetna, Inc. and the Blue Cross and Blue Shield Association have had similar findings. CIGNA released preliminary findings last February.

According to results of the CIGNA study, nonpharmacy medical costs were lower among CDH enrollees than were costs for the population covered by a more traditional managed care plan. Although medical costs among the CDH enrollees declined 5.5%, costs among those in the control group increased 11.9% during the same period, CIGNA said.

While medical costs decreased among CDH enrollees, preventive care visits increased. In 2004, pre-CDH enrollees had 368 preventive care visits per 1,000 members. That number increased 8% to 397 in 2005 after the enrollees moved to a CDH plan, CIGNA reported. By contrast, non-CDH enrollees had 352 preventive care visits per 1,000 members in 2004 and a nearly identical number (354) in 2005, according to the study. Overall, CDH enrollees received recommended care at the same or higher levels as those enrolled in more traditional plans.

"This confirms our expectations across the board," says Chief Consumerism Actuary Dave Tuomala, who previously was an actuary with Definity Health. Tuomala says he was somewhat surprised that non-CDH enrollees generally had a higher level of engagement if their employer had a CDH plan in place.

Here's a look at some of the highlights from the study:

  • Out-of-pocket costs: Members saw their annual out-of-pocket costs [excluding premiums] decline from an average of 19% in 2004 to 16% in 2005 when they switched from an HMO or PPO to an HRA-based plan. Moreover, employee-paid premiums tend to be 10% to 20% lower than premiums for the more traditional managed care plans, CIGNA says.
  • Chronically ill members: Medical costs associated with chronically ill CDH enrollees decreased 2.9% between 2004 and 2005, and medical costs among episodic-care members dropped 8.4% during the same period. According to CIGNA, the declines were driven by "a more discerning use of preference-sensitive services, not the avoidance of needed care."
  • HRA funding: The gap between the annual HRA contribution and the deductible was between $500 and $750 for 78% of CDH enrollees, the study found. According to the study, 63% of enrollees received an annual HRA contribution of $500, while just 2% received less than that amount. More than 90% of HRA-based plans included post-deductible in-network coinsurance of 20% or less.

To see a copy of the study, visit http://cigna.mediaroom.com.


Executive Compensation Strategies for Nonprofit Hospitals, Health Systems and Health Plans


Hot Products

49 Steps to Implement Sarbanes-Oxley Best Practices

Specialty Pharmacy 2007: Stakeholders, Strategies and Markets

Tailored Managed Care Products: Commercial, Medicare and CDH

63 Billing and Coding Strategies for Avoiding Medicare False Claims

35 Employer Case Studies from Pioneers of HSA- and HRA-Based Plans

Best Sellers
Medicare Part D Compliance News

Managed Medicare & Medicaid Factbook: 2006

See full listing
of products at
AIS Marketplace




To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.

April 13, 2005

Treasury and IRS Issue Ruling on Contributions of
Spouses to HSA Accounts

WASHINGTON, DC -- The Treasury Department and IRS today announced a ruling confirming that an individual can be eligible to contribute to a Health Savings Account (HSA) even if his or her spouse has nonqualifying family coverage, provided the spouse's coverage does not cover the individual.  In addition, the ruling clarifies how much the eligible spouse can contribute to an HSA in such a situation.

For example, Steve and Mary Jones are married with three children.  Steve has a low deductible family health plan that covers him and the Jones children.  His plan does not qualify for an HSA.  The ruling clarifies that Mary, who is not covered under Steve's family plan, may have her own separate high-deductible health plan that does qualify for an HSA.

HSAs were created by the Medicare bill signed by President Bush on December 8, 2003, and are designed to expand access to health care by helping individuals save for future qualified medical and retiree health expenses on a tax-free basis.  An individual who is covered by a high deductible health plan can make a tax-deductible contribution to an HSA, and use it to pay for out-of-pocket medical expenses. This will help more American families get the health care they need at a price they can afford.  More information about HSAs is available at Treasury's HSA web site: www.treas.gov/offices/public-affairs/hsa/

Legislative Release:

Since the implementation of HSAs there have been many pending issues. In the latest legislative release on July 23, 2004, the U.S Department of Treasury issued comprehensive guidance on HSAs. For a copy of Notice 2004-50, click here IRS HSA Update July 23, 2004.pdf 

Key Points

Medicare Eligibility: An individual who is eligible for Medicare Part A or Part B, but is not enrolled is eligible to contribute to an HSA and if over the age of 55 may also contribute an additional catch-up contribution. (Q & A: 2, 3)


Family HDHP Health Coverage: Family HDHP Health Coverage is a health plan which covers an eligible individual and at least one other individual (whether or not the other individual is an eligible individual.)  For example: An individual, who is an eligible individual, and his dependent child are covered under an “employee plus one” HDHP offered by the individual’s employer. The coverage is family HDHP coverage for HSA purposes.  (Q & A: 12)


HDHP coverage and Discount Cards: Individuals covered by an HDHP and also have a discount card that enabled the user to obtain discounts for health plan services or products is eligible to contribute to an HSA. (Q & A: 9, 25)


Cumulative Embedded Deductibles: When an HDHP includes cumulative embedded deductibles, it must either by design or by its express terms, indicate a limit on maximum out-of-pocket expenses.(Q & A: 20)  When calculating maximum annual contribution limits with embedded deductibles and umbrella deductibles, it is the least of the following amounts: (Q & A: 30-31)

            1. The maximum annual contribution limit for family coverage ($5,150 for calendar year 2004 

            2. The umbrella deductible

            3. The embedded individual deductible multiplied by the number of family members covered by the plan


Contribution Source: While Notice 2004-2, Q & A: 11 only refers to contributions by employers or family members, any person can make contributions to an HSA on behalf of an eligible individual. (Q & A: 28)


Distributions for ineligible individuals: If an account beneficiary’s spouse and/or other dependents are covered under a non-HDHP, distributions from the HSA to pay their qualified medical expenses are eligible expenses and are excluded from the account beneficiary’s gross income. (Q & A: 36)


Timing of Distributions: An account beneficiary may pay or reimburse qualified medical expenses on a tax-free basis in later tax years as long as the expenses were incurred after the HSA was established.  Thus, there is no limit on when distributions must occur. Account beneficiaries must keep sufficient records to later show that the distributions were not previously reimbursed. (Q & A: 39)


Comparable contributions and Cafeteria Plans: If an employer makes a contribution through a cafeteria plan to the HSA of each eligible individual, in an amount equal to the amount of the employee’s HSA contribution or a percentage of the amount of the employee’s HSA contribution, contributions are not subject to the comparability rules of section 4980G.  However, contributions are subject to the Section 125 nondiscrimination rules. Any employer contributions not through section 125 are subject to the comparability rules in section 4980G.  (Q & A: 46-49)


Comparable contributions and Catch-up Contributions: Due to the comparability rules established in Section 4980G, an employer cannot offer to make additional HSA contributions to individuals who are eligible for catch-up contributions. (Q & A: 50)


Cafeteria Plan Requirements: As compared to an FSA, HSA contributions through a Section 125 plan are not subject to: 1) The prohibition against employees carrying over funds from one plan year to another; 2) the requirement that the maximum amount of reimbursement must be available at all times; and 3) the mandatory twelve-month period of coverage. Additionally, an employee may revoke an HSA contribution and/or make a new election throughout the year.  (Q & A: 57-61)