The Treasury Department issued a notice on February 1, 2012 that an individual who is eligible to receive medical services at an Indian Health Service (IHS) facility, but who has not actually received such services during the previous three months, is an eligible individual who may establish and make tax-free contributions to a Health Savings Account (HSA). IHS is a division of the U.S. Department of Health and Human Services (HHS). An “IHS facility” means a facility operated directly by IHS or by a tribe or tribal organization.
The announcement adopts a rule previously applied to people who receive medical benefits from the Veterans Administration.
The general rule is that an individual may make contributions to an HSA if he or she is covered by a high deductible health plan on the first day of the month and is not covered by any other health plan. The Department is making an exception to this rule for people who are eligible for IHS services, but have not received services from the IHS during the previous three months.
A previous notice provided that the receipt of permitted coverage, such as dental and vision care, or the receipt of preventive care, such as well-baby visits, immunizations, weight-loss and tobacco cessation programs does not affect an individual’s eligibility for an HSA.
Here’s an example of how this new rule works: Joe is eligible for services from IHS and his employer sponsors an HSA. In 2012, he goes to an IHS facility in January for treatment of bronchitis, in October for a flu shot and in November for treatment of a broken arm. During 2012, he is able to contribute to an HSA in January, May, June, July, August, September, October and November. He cannot contribute to his HSA in February, March, April and December (or in January or February of 2013) because he went to the IHS facility and received treatment that did not consist of permitted coverage or preventive care. His October visit to IHS for a flu shot does not prevent his contribution to his HSA in November because the visit was for preventive care.