New Health Savings Account Considered

The Office of Personnel Management is exploring whether and when a new type of tax-advantaged account created by the recently enacted Medicare reform bill called a health savings account can be added to the Federal Employees Health Benefits program. Under recent IRS guidance (Notice 2004-2) HSAs will become available to anyone under age 65 in a high-deductible health plan-defined as one with annual deductible of at least $1,000 and annual out-of-pocket expenses of up to $5, 000 for single coverage, and double those amounts for family coverage. OPM estimates that 3.1 million individuals are in FEHB plans fitting those criteria.