New IRS Guidance Clarifies Tax Treatment of HSAs

Health savings accounts (HSAs) are a useful tool for employees and employers because of their tax-favored status. The IRS has recently clarified that certain Affordable Care Act rules will not affect the tax treatment of HSAs.

An HSA must be paired with a high-deductible health plan (HDHP) to receive tax-favored treatment. The Affordable Care Act requires health plans to provide certain preventive services with no deductible or cost-sharing. There was some concern that this rule would result in loss of HDHP status with the effect of HSAs losing tax favorable treatment. The IRS, however, has indicated that HDHPs will not lose their status as HDHPs solely because they offer the preventive services required by the Affordable Care Act. Thus, HSAs will still be a strong, tax-favored tool for dealing with medical expenses.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com

How the ACA Will Affect Medical Practices in 2013

The Affordable Care Act will bring several major tax consequences for medical practices in the new year. Physicians need to be aware of important changes to health care law taking effect in 2013. These changes will affect both patients and providers. A few of these key changes are as follows.

Patients with flexible spending accounts may find their usefulness limited. In January, a new cap comes into effect, limiting FSA spending to $2,500 per year. Furthermore, the threshold for unreimbursed medical expenses will increase from 7.5% of adjusted gross income to 10%. This burden will be waived for patients 65 and older until 2016. High income earners will see a 0.9% Medicare tax hike, as well as a 3.8% medicare tax assessment on unearned income.

Primary care physicians will see an increase in Medicaid payments. For 2013 and 2014, the new rate is 100% of the Medicare payment rate. Finally, new excise taxes will be imposed on certain medical devices. Given the significant number of changes in 2013, good planning will save taxes.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com