By Ric Joyner, CEBS, GBA, CFCI
The IRS clarifies verbal comments regarding those who receive Indian Health Services medical care. Similar to Veterans Administration Benefits, a person is not an eligible individual for purposes of participant in an HSA who uses VA and now IHS within the last 3 months. However, the IRS clarifies in notice 2012-14 that if an eligible individual uses IHS (and assuming VA) for dental, vision, well baby, and preventative care they ARE eligible to contribute and maintain their HSA and does not disqualify the person from an HSA.
This notice provides guidance on whether an individual eligible to receive medical services at an Indian Health Service facility is an “eligible individual” with respect to Health Savings Accounts (HSAs) under § 223 of the Internal Revenue Code (the Code).
Section 223(c)(1) provides that an eligible individual means, for any month, an individual who is covered by a high deductible health plan (HDHP) on the first day of such month and, generally, is not covered by any other health plan, with certain exceptions. In addition, an eligible individual cannot be claimed as a tax dependent on another person’s tax return and cannot be enrolled in Medicare. Section 223(b)(6) and (7). An eligible individual may establish and make tax-free contributions to an HSA.
Indian Health Service (IHS) is a Division within the U.S. Department of Health and Human Services. An “IHS facility” means a facility operated directly by IHS, or by a tribe or tribal organization under the Indian Self-Determination and Education Assistance Act.
HSA ELIGIBILITY RULES AND IHS FACILITIES:
An individual who is eligible to receive medical services at an IHS facility, but who has not actually received such services during the previous three months, is an eligible individual within the meaning of § 223(c)(1) who may establish and make tax-free contributions to an HSA. However, an individual generally is not an eligible individual if the individual has received medical services at an IHS facility at any time during the previous three months. Notice 2004-2, Q&A-6, provides 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.