The Tax Relief and Health Care Act of 2006 included provisions that would take affect on January 1, 2007, and one of these provisions did include transferring funds into an HSA account from an IRA. The maximum contribution amount was also increased to $2,850 for a single person and $5,650 for family coverage. You may now make a one time transfer from your IRA into a Health Savings Account, but you will need to open an HSA in order to do this. Deductions may not be taken directly from your IRA in order to pay for medical expenses; they need to come from the HSA account. One additional change, that is probably the most important, is that now partial year enrollees are able to contribute the full annual maimum into their Health Savings Account. This will encourage people to enroll in high-deductible health plans during the middle or end of the year in order to obtain the tax benefits. The initial purpose of Health Savings Account legislation by the federal government was to encourage persons to purchase health insurance, and providing them with more flexible guidelines will hopefully make these HSA compatible health plans more attractive.

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