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IRS Changes to HSA’s for 2011

The new year is bringing a change to the way Health Savings Accounts (HSA’s) are treated by the IRS.  Starting on January 1, 2011, the IRS will require a doctor’s prescription in order to use HSA funds for most over-the-counter medications purchased on or after January 1st.

However, some things, like insulin and diabetic supplies, will not require a prescription. This change will not impact over-the-counter purchases made in 2010, so those items will not require a doctor’s prescription.  

Note that in 2011 the penalty for using an HSA for non-qualified expenses will increase from 10% to 20% of the amount spent.  Please follow this link for more information on Health Savings Accounts.

Please consult with a qualified tax professional for all tax related matters.

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