How the New Health Care Reform Legislation Affects Tax-Advantaged Health Care Accounts (HSAs, FSAs, and HRAs)

Important Information for HSA and FSA/HRA Account Holders

Changes to HSAs, FSAs, and HRAs

As of Jan. 1, 2011, many over-the-counter (OTC) drugs and medicines (except insulin) are no longer qualified expenses, and account holders can't use HSA, FSA, or HRA funds to purchase OTC medications without a doctor’s prescription.

Changes to FSAs Only

The amount you can contribute to your health care FSA will be restricted by the IRS instead of your employer. Starting in 2013, the health care reform law caps annual FSA contributions for individuals at $2,500 per year.

Note: This change won't impact dependent-care FSAs. The allowable contribution for a family will remain $5,000.

Changes to HSAs Only

The penalty for using HSA funds for non-qualified medical expenses increases to 20% starting Jan. 1, 2011.

The health care reform bill doubled the penalty for using the money for non-medical expenses before age 65 from 10% to 20%. This penalty is in addition to income tax paid for using HSA funds for non-qualified expenses.

New Rules for Debit Cards

Learn how changes affect debit card use.