It wasn't until IRS Notice 2008-59 that administrators and owners received clear guidance on establishing an account. It was, however, clear about one aspect: Account owner couldn't reimburse any expenses - even for qualified services - that they incurred before they established their account.īut IRS Notice 2004-2 and IRS Notice 2004-50 didn't explain how an owner established a Health Savings Account. The original 2004 Internal Revenue Service (IRS) guidance on Health Savings Accounts was vague on the concept of establishing an account. In most states, a trust becomes effective when a person signals an intent to open a trust (for example, by signing a trust agreement), naming a beneficiary who takes ownership upon the owner's death, and placing corpus (a Latin term meaning something of value) in the trust. That's a great feature for workers who leave their jobs (their account isn't tied to their employer, so they can take it with them) or those who aren't engaged in a traditional employer-employee arrangement (these business owners and freelancers can enjoy the benefits of a Health Savings Account, but not a Health FSA or HRA). Unlike a Health FSA or an HRA, both of which are employer-sponsored reimbursement programs, a Health Savings Account is a trust owned by the person eligible to open it.

And one of those ways leads to the emphasis on the date that the account is established. The concept doesn't apply to Health FSAs or Health Reimbursement Arrangements (HRA), the two popular employer-sponsored programs that help employees reimburse qualified expenses with pre-tax payroll deductions or tax-free employer funds.īut Health Savings Accounts are different from Health FSAs and HRAs in some important ways.

Prior to the introduction of Health Savings Accounts, the concept of establishing an account was foreign to employees enrolled in a reimbursement account. But you probably need to take this step to begin to reimburse qualified expenses tax-free. You enrolled in an HSA-qualified medical plan effective Jan.

Hsa qualified expenses 2021