How do HSAs differ from Archer MSAs?
While many of the rules that apply to HSAs are similar to those governing MSAs, there are some key differences: • HSAs are available to individuals covered by a high deductible health plan (HDHP) regardless of whether the person is self-employed or employed by a small employer and regardless of whether their employer maintains the HDHP • An employer may offer HSAs through a cafeteria plan • Employer contributions to an HSA reduce what an individual can contribute, but they do not eliminate an individual’s ability to contribute • Nonqualifying use of HSA assets are subject to a potential 10 percent (rather than a 15 percent) penalty • HSA qualifying medical expenses include expenses to purchase certain health insurance after age 65. The law allows MSA assets to be rolled over to HSAs, which is one way a current MSA account holder can immediately take advantage of these more favorable HSA rules.
