The Treasury Department issued an interesting press release yesterday, trying to encourage banks and credit unions to offer health savings accounts (“HSAs”). The press release describeds HSAs as a “revolutionary option” and a “great new deposit accounts” for banks and credit unions. Here is what Treasury had to say about why banks and credit unions should want to offer the accounts:
1. Any bank or credit union is automatically allowed to offer HSAs to their customers as either a trust or a custodial account.2. Banks or credit unions can modify their IRA enrollment forms to reflect HSAs or use the model IRS forms. These model forms are available from the IRS or can be downloaded from the Treasury & IRS web sites. [here and here]
3. Reporting requirements are straightforward:
(a) Form 5498 is used to report total contributions made to the account during the year and the value of the account at the end of the year.
(b) Form 1099SA reports the total distributions taken from the account during the year.
4. Substantiation that distributions were used for qualified medical expenses is not required.
5. HSA funds can be invested in the same types of investments as IRAs.
6. Minimum deposit, minimum balance requirements, minimum distribution requirements, distribution timing requirements, and account fees can be set by the bank (i.e., the HSA rules do not apply any additional conditions on an HSA trustee or custodian).
By the way, the Treasury has posted all of the technical guidance pertaining to HSAs at this link. You can also access some great HSA resources at this link.