Changes to HSAs as a result of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act:

Starting January 1, 2011

Distributions for medicine qualified only if for prescribed drug or insulin. Conforms the definition of qualified medical expenses for HSAs, FSAs, and HRAs to the definition used for the medical expense itemized deduction. Over-the-counter medicine obtained with a prescription continues to qualify as a qualified medical expense.

Increase in additional tax on distributions from HSAs not used for qualified medical expenses. Increases the additional tax for HSA withdrawals prior to age 65 that are used for purposes other than qualified medical expenses from 10 percent to 20 percent.

For information on other healthcare related changes as a result of the Patient Protection and Affordable Care Act of 2010 you can go to http://dpc.senate.gov/healthreformbill/healthbill96.pdf.