New Regulations - Health Care Reform

The health reform legislation (Patient Protection and Affordable Care Act) signed into law in March 2010 makes some changes to how you manage your HSA. Starting January 1, 2011, you can no longer be reimbursed on a tax-free basis for the costs of over-the-counter medications. And, the tax on distributions from your HSA that is not used for qualified medical expenses will increase from 10% to 20%.

A number of consumer organizations, including Consumers Union, the publisher of Consumer Reports, have been critical of HSAs because they provide the greatest benefit to young healthy people who do not have dependents and wealthy people who can save more on their taxes.