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Transferring Funds from Flexible Spending to Health Savings Accounts

New rules allow individuals to transfer unused funds from Health Flexible Spending Arrangements (FSA) or Health Reimbursement Arrangements (HRA) directly to Health Savings Accounts (HSA). This aims to simplify healthcare finance management, especially when transitioning to high-deductible health plans. These changes could help citizens better utilize their accumulated healthcare funds.
Key points
Ability to transfer funds from FSA and HRA to an HSA when enrolling in a high-deductible health plan.
There is a dollar limit on the amount that can be transferred, depending on the type of coverage.
Information about transferred funds will be reported on your W-2 tax form.
These changes apply to distributions made after December 31, 2023.
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Additional Information
To amend the Internal Revenue Code of 1986 to allow distributions from a health flexible spending arrangement or health reimbursement arrangement directly to a health savings account in connection with establishing coverage under a high deductible health plan.
Print number: HR 5317
Sponsor: Rep. Steel, Michelle [R-CA-45]
Process start date: 2023-08-29