Individuals who are eligible for medical services at IHS facilities may still participate in HSAs

BY SALLY P. SCHREIBER

The IRS on Wednesday explained that people who are eligible to receive medical services at Indian Health Service (IHS) facilities are not automatically disqualified from making tax-free contributions to health savings accounts (HSAs) (Notice 2012-14).

Under Sec. 223(c)(1), an eligible individual for HSA purposes is, for any month, an individual who is covered by a high-deductible health plan on the first day of the month and is generally not covered by any other health plan. The IHS, run by the U.S. Department of Health and Human Services, provides health services to American Indians and Native Alaskans who belong to federally recognized tribes.

In Notice 2012-14, the IRS provides that an individual who is eligible to receive medical services at an IHS facility, but who has not actually received services at a facility during the previous three months, is an eligible individual under Sec. 223(c)(1) and may make tax-free contributions to an HSA. Conversely, an individual who has received services at an IHS facility within the past three months is not permitted to contribute to an HSA. 

The notice also suggests that receipt of coverage permitted as outlined in Q&A 6 of Notice 2004-2 (dental and vision care and various types of preventive care) at an IHS facility would also not disqualify an individual from participating in an HSA.          

The IRS has asked for comments on the eligibility rule announced in Notice 2012-14. Comments should be submitted by April 30.

Sally P. Schreiber ( sschreiber@aicpa.org ) is a JofA senior editor.

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