The Tax Relief and Health Care Act of 2006 contains provisions to improve health savings accounts (HSAs):
1. HSA Funding Contributions: The Act allows rollover contributions from flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) into HSAs as long as the contributions are no more than the balance of those accounts as of September 21, 2006 and are made on or before January 1, 2012.
2. Increase in Deductible Limits of HSA Contributions: The contribution limitation which previously limited contributions to the lesser of the deductible of the high deductible health plan or the statutory limitations i.e. $2,250 for individuals and $4,500 for families (as adjusted for cost of living), have been revised to delete the plan deductible as a limitation.
3. IRA Rollovers: The revision allows one time rollovers from IRAs into HSAs. This revision is a one time opportunity and the rollover, which is effected by excluding the transfer from gross income, is limited to the annual limitation for contributions to NSA less any prior HSA funding distribution from a FSA or HRA.
