Banking “Reg. E” Does Not Apply to HSAs Debit Cards

September 5, 2006 – Amendments to Regulation E (Reg. E) posted in the Federal Register August 30, 2006, clarify that Reg. E, a high-profile federal banking regulation that mandates extensive disclosures and authorization requirements to protect consumers who are engaged in the electronic transfer of funds, does not apply to health savings accounts (HSAs). The regulation summary states that cards used solely for health-related expenses, such as those for HSAs, flexible spending accounts, and health reimbursement arrangements, are not governed by Reg. E, whether funded by the employer or the employee.

Therefore, financial organizations that offer HSAs with a debit card payment option are not subject to these regulations. The regulations indicate, however, that the Federal Reserve System Board of Governors will continue to monitor the development of the prepaid card market and could reconsider whether Reg. E should govern cards used for these health-related expenses.

The Reg. E amendments may be accessed as follows.