The Internal Revenue Service is finally starting to realize that there is great value in Health Savings Accounts.  As more and more people adopt these accounts, the IRS realizes that this will ultimately reduce the pressure on the government to subsidize post retirement health benefits.

This is a lot like the development of the 401K plan.  The 401K replaced many pension plans.  It also reduced the responsibility of employers for providing retirement income for workers - now the workers were funding most of the retirement benefits.

The Health Savings account will help seniors meet the expenses that are not covered by Medicare, or other government funded programs.

Now, the Internal Revenue Service is allowing the shifting of funds from an Individual Retirement Account to a Health Savings Account. Any individual who is enrolled in a high deductible health plan, the type that is required to qualify for a Health Savings Account, can make a one-time tax free transfer from their IRA to their Health Savings Account. This transfer can be made without facing income taxes or penalties.

The transfer amount cannot exceed the individual's maximum HSA contribution limit. For example, a 57 year old worker with a maximum annual contribution of $3800 could transfer that $3800 from his IRA to his HSA. The funds must go directly from the IRA to the HSA account.

We can expect to see more opportunities like this, as the government is seeking ways to reduce the cost of health benefits for retirees. For more information on Health Savings Accounts contact us.