President George W. Bush signed H.R. 6111, the Tax Relief and Health Care Act of 2006, into law today.
The law, passed by the Senate and House before adjourning, includes provisions that will enhance the tax advantages of health savings account plans.
Charles E. Symington Jr., senior vice president for government affairs and federal relations of the Independent Insurance Agents and Brokers of America Inc., Washington, praised the law.
“We strongly support improvements to health savings accounts, to provide more options for individuals and families to cover their medical expenses,” he said.
Among other provisions, the bill does the following:
Allows individuals to fund HSAs with 1-time transfers from their individual retirement accounts, health reimbursement arrangements or flexible spending accounts.
Allows the maximum annual contribution to HSAs to be made at any point in a given year. Previously, individuals could only make prorated contributions based on their enrollment dates.
Allows individuals to contribute amounts equal to the annual contribution limit, regardless of their plans’ deductible limits.
Allows employees with lesser earnings to receive higher contributions from their employers into HSAs.