(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
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JS-1748
Today Treasury and the IRS issued for public comment model documents that can be used as trust or custodial agreements for Health Savings Accounts (HSAs). These documents, which can be reviewed at www.irs.gov (see links below), are being released in proposed form in order to give the public the opportunity to comment on the content before being issued in final form. Comments may be filed online at the above website or verbally by calling (202) 622-4HSA.
We have received numerous requests from the public for a safe-harbor document like this one. Many banks and other prospective HSA trustees and custodians would like to offer a product off the shelf and be certain that the form of the trust or custodial agreement meets the requirements under the Internal Revenue Code, said Acting Assistant Secretary for Tax Policy Greg Jenner. We look forward to hearing any comments that interested parties may have and finalizing these documents for use as soon as possible.
As is the case for most IRS forms, the public comment period will be open for 30 days following today. While HSA trustees and custodians are free to now use some or all of the language from the draft forms in their own trust or custodial agreements, the forms are not intended to be used as stand-alone trust or custodial agreements until they are finalized after the end of the comment period. Once finalized, these safe-harbor forms will not be required; they are offered for those trustees and custodians who wish to use them.
On Monday, June 21, Treasury and the IRS also issued guidance providing transition relief to health plans that are unable to qualify as high deductible health plans (HDHPs) due to state mandates. Under the guidance, a health plan that fails to qualify as an HDHP because it provides benefits required under a state law in effect on January 1, 2004, will nevertheless be treated as an HDHP until January 1, 2006.
This guidance will enable individuals in states that require health plans to provide certain benefits the ability to participate in HSAs. This notice allows those individuals to benefit from HSAs while allowing their states time to modify state laws to allow HSA-compatible HDHPs.
Generally, HDHPs must have a high deductible and can provide no benefits other than preventive benefits below that deductible. Some state insurance laws, however, require health plans to provide certain benefits without a deductible, often as an extension of mandates related to preventive benefits. Because the HSA law became effective less than a month after it was enacted, some states with such requirements have not had a chance to amend their laws to allow HDHPs, for example, by replacing first-dollar benefit requirements with a requirement that benefits be provided no less favorably than other benefits.
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