Pub 969

What’s New for 2011:

Qualified Medical Expenses. For HSA, MSA, FSA, andHRA purposes, a medicine or drug will be a qualified medical expense only if the medicine or drug:

  • Requires a prescription,
  • Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or
  • Is insulin.

pub 969This applies to amounts paid after 2010. However, it does not apply to amounts paid in 2011 for medicines or drugs purchased before January 1, 2011.

Additional tax increased. For HSA and MSA purposes, the additional tax on distributions not used for qualified medical expenses is increased to 20%. This applies to distributions after 2010.

Publication 969 – Content Overview

What’s New for 2011 (see above)

Introduction

  • Ordering forms and publications.
  • Tax questions.

Publication 969 – Main Content

  • Health Savings Accounts (HSAs)
  • Qualifying for an HSA
  • Contributions to an HSA
  • Distributions From an HSA
  • Balance in an HSA
  • Death of HSA Holder
  • Filing Form 8889
  • Employer Participation

Medical Savings Accounts (MSAs)

  • Archer MSAs
  • Contributions to an MSA
  • Distributions From an MSA
  • Balance in an Archer MSA
  • Death of the Archer MSA Holder
  • Filing Form 8853
  • Employer Participation
  • Medicare Advantage MSAs

Flexible Spending Arrangements (FSAs)

  • Qualifying for an FSA
  • Contributions to an FSA
  • Distributions From an FSA
  • Balance in an FSA
  • Employer Participation

Health Reimbursement Arrangements (HRAs)

  • Qualifying for an HRA
  • Contributions to an HRA
  • Distributions From an HRA
  • Balance in an HRA
  • Employer Participation

How To Get Tax Help

  • Low Income Taxpayer Clinics (LITCs).

Health Savings Accounts (HSAs)

A health savings account (HSA) is a tax-exempt trust or custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA.

No permission or authorization from the IRS is necessary to establish an HSA. When you set up an HSA, you will need to work with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is different from your health plan provider.

Your employer may already have some information on HSA trustees in your area.