Tony Novak profile picture
  "AskTony" column archive        


Most Popular

AskTony Archive

This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

The author is paid for product endorsements and has an ownership or other financial interest in the businesses related to the topics covered.

New questions

Submit consumer finance questions at and health insurance questions at

Sponsored by: Insurance Exchange - your source of valuable information on state and federal health reform benefits.

Core Health Insurance - America's favorite mini-med insurance  with affordable premiums, freedom to choose providers, optional PPO discounts and guaranteed eligibility regardless of medical conditions.

Please support the Web sites that make publication of AskTony services possible.

Disqualified for HSA

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: I have a HSA-qualified high deductible health insurance with an additional insurance that covers prescription drugs for a fixed co-payment of $10 for generic drugs or $20 for name brand drugs.

A: Unfortunately, the prescription plan is considered a disqualifying insurance under IRS Revenue Ruling 2004-38. The HSA program requires a high deductible for both regular medical expenses as well as for prescription drugs. This appears to be a design error on the part of whoever developed your employer's health benefit plan. In contrast, some supplemental health insurance policies like do not prohibit policyholders from qualifying for the HSA even though it appears to provide the same type of coverage without a deductible. It can be confusing issue, so the employer should get some qualified help to fix the plan right away. If this is fixed right away, at least half of the tax benefit can be saved for 2006.


More resources:

Freedom Benefits Small Business Benefit Plans