HSA Eligibility Expanded for Veterans

HSA Eligibility Expanded for Veterans

Posted: May 5, 2016  

I was thinking about May being Military Appreciation Month and taking a moment to reflect on those men and women that have bravely served our country so that we can enjoy the wonderful lives we lead.  As I reflected on their service, it led me to also reflect on my industry and what we do to honor them when we can.  For years, we have worked with our clients and, unfortunately in many instances, had to inform them that certain benefits they are eligible to receive because of service related injuries prevent them from enjoying tax advantages related to Health Savings Accounts (HSA). 

I am very happy to report that in 2015 Congress got it right and passed The Surface Transportation and Veterans Health Care Choice Improvement Act (H.R. 3236) which the President later signed into law.

Veterans have generally been eligible for medical benefits through the Veterans Health Administration (VA) but, because the VA is not a high deductible health plan (HDHP), HSA eligibility issues have arisen for veterans who are also covered under a HDHP.

Generally, the rule has always been that a veteran who is eligible for VA benefits, but has not actually received VA benefits in the preceding three months, can still be eligible to make or receive HSA contributions.  Veterans who received medical benefits from the VA at any time during the previous three months ARE NOT HSA eligible.

The new law permits veterans enrolled in a HDHP, as long as they have no other disqualifying coverage, and who have a service-connected disability to make or receive HSA contributions regardless of when they received VA benefits.  In other words, veterans with a service-connected disability will not be blocked from HSA eligibility merely because they accessed VA benefits in the prior three months.

This HSA eligibility expansion for veterans was effective January 1, 2016.

This change is the right move and a welcome change for veterans and those that employee veterans.  Benefits should be easily administered and equitable to all employees, especially those who have sacrificed so much for their country.  Thank you, all veterans, for your service and BRAVO to our legislators for getting this one right.