FROM THE OFFICE OF PUBLIC AFFAIRS

September 23, 2004
js-1944

Treasury Urges Banks and Credit Unions to Offer Health Savings Accounts

Health Savings Accounts, created as part of the President's Medicare reform legislation, are a revolutionary option for Americans when it comes to purchasing health benefits. In addition, Health Savings Accounts are a great new deposit account for banks and credit unions.  Although less than one year old, the U.S. Treasury Department has been swift to provide guidance on how the law will be implemented. 

The guidance indicates just how easy it is for banks and credit unions to offer these accounts:

1.  Any bank or credit union is automatically allowed to offer HSAs to their customers as either a trust or a custodial account. 

2.  Banks or credit unions can modify their IRA enrollment forms to reflect HSAs or use the model IRS forms.  These model forms are available from the IRS or can be downloaded from the Treasury & IRS web sites. 

3.  Reporting requirements are straightforward:

(a)    Form 5498 is used to report total contributions made to the account during the year and the value of the account at the end of the year.

(b) Form 1099SA reports the total distributions taken from the account during the year.

4.  Substantiation that distributions were used for qualified medical expenses is not required. 

5.  HSA funds can be invested in the same types of investments as IRAs. 

6.  Minimum deposit, minimum balance requirements, minimum distribution requirements, distribution timing requirements, and account fees can be set by the bank (i.e., the HSA rules do not apply any additional conditions on an HSA trustee or custodian).

"We hope all banks and credit unions will consider offering Health Savings Accounts to all their customers," said Roy Ramthun, Treasury's Senior Advisor for Health Initiatives. "We have worked hard this year to get all the guidance out, to make it as easy as possible for banks and credit unions to offer HSAs."

-30-