UPDATE:  IRS Provides Transition Relief for Health Savings Account Plans in Maryland

UPDATE: IRS Provides Transition Relief for Health Savings Account Plans in Maryland

Under Maryland law, effective January 1, 2018, 100% of the cost of male sterilization was to be provided by insurance companies without a deductible, which put health plans with high deductibles (HDHPs) at risk for disqualification under federal law.  This conflict between state and federal law had the unforeseen consequence of invalidating Health Savings Accounts (HSAs) in Maryland.  The IRS is aware of Maryland’s law, and the resulting complications. 

In view of Maryland’s situation, the IRS is providing transition relief for periods before 2020 (back to the effective date of Maryland’s law).  During this period, individuals with HDHPs will not be disqualified from their HDHPs or their HSAs.  During this time, individuals and employers may continue to contribute to HSAs, as they normally would have, prior to Maryland’s law and its conflict with federal law.

Maryland has until the end of the transition relief period to change its law to eliminate the state/federal law conflict.  As mentioned in our previous blog, Maryland Law Jeopardizes the Benefits of Health Savings Account Plans in Maryland, Maryland is currently attempting to pass legislation, under SB 137, to resolve this issue.

Please consult your HSA/health insurance provider for updates.

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The Cultural Alliance of Greater Washington has worked with Bormel, Grice & Huyett, P.A., since 1988. Their knowledge of the arts and the arts community make their services invaluable. They can translate accounting terminology into a comprehensive language. For many organizations, the accounting firm of Bormel, Grice & Huyett provides the financial "information bridge." We whole-heartedly recommend Bormel, Grice & Huyett, excellent accountants who care about our arts organizations.
Jennifer Cover Payne, Executive Director, Cultural Alliance of Greater Washington

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