“We strongly support improvements to health savings accounts, to provide more options for individuals and families to cover their medical expenses, and we appreciate President Bush signing it into law.

“We are grateful that Congress made a point of passing this important legislation before finishing its work for the year,” he added.

The legislation increases the contribution limits for all individuals, eliminates contribution penalties for midyear enrollees, and allows consumers to convert existing health reimbursement arrangements and flexible spending arrangements into health saving accounts.

Most provisions, including the rollover and increased cap, are effective as of the date of enactment.

The provision for an IRA rollover to a health savings account is effective for tax years beginning on or after Dec. 31, the law says.

Health savings account funding is tax-deductible, tax-deferred while growing and available for tax-free usage for medical expenses. Annual contributions in 2007 will be capped at $2,850 per individual and $5,650 per family.

According to officials at America's Health Insurance Plans, the reforms will:

o Allow HSAs to cover preventive and maintenance drugs before the deductible is met.

o Allow HSA dollars to be used to purchase Medigap coverage.

o Allow family policies to have lower individual deductibles for each family member within their HSA plan.

o Provide for greater coordination of HSAs, FSAs and HRAs.