June 21, 2005 (PLANSPONSOR.com) - The Internal
Revenue Service has issued an information letter advising
that employees in Texas can still contribute to a health
savings account (HSA) if they have an "injury benefit plan"
instead of workers' compensation benefits.
According to a Thompson.com report, Section 223(a) of
the Internal Revenue Code allows a deduction for
contributions to an HSA by an "eligible individual," which
is anyone who, in addition to other requirements, is
covered under a high-deductible health plan (HDHP) on the
first day of the month and is not, at the same time,
covered under a non-HDHP.
According to the report, an eligible individual may have
permitted insurance, disregarded coverage, and preventive
care in addition to an HDHP.
According to the IRS, the Texas plans provide
disregarded coverage within the meaning of the Code because
coverage is limited solely to accident or illness with a
workplace origin so there is no overlap between the plans
and the employers' high-deductible group health plans.