Health Savings Account HSA

 

A Health Savings Account HSA is a tax-exempt trust or custodial account set up with a qualified HSA trustee (a qualified HSA trustee can be a bank, and insurance company, or anyone already approved by the IRS to be a trustee of IRAs or Archer MSAs) in which money is saved exclusively for future medical expenses. This account must be used in conjunction with a High Deductible Health Plan (HDHP).

HSA LImits

	Contribution limit		HDHP min deductible		Maximum OOP
Year	Self-only	Family	Self-only	Family	Self-only	Family	Ref
2011	$3,050	$6,150	$1,200	$2,400	$5,950	$11,900	RP-10-22
2010	3,050	6,150	1,200	2,400	5,950	11,900	RP-09-29
2009	3,000	5,950	1,150	2,300	5,800	11,600	RP-08-29
2008	2,900	5,800	1,100	2,200	5,600	11,200	RP-07-36
2007	2,850	5,650	1,100	2,200	5,500	11,000	RP-06-53
2006*	2,700	5,450	1,050	2,100	5,250	10,500	RP-05-70
2005*	2,650	5,250	1,000	2,000	5,100	10,200	RP-04-71

*Until the Tax Relief and Health Care Act of 2006 (HR 6111), PL-109-432, as implemented through Rev. Proc. 2007-36, the actual contribution limit was the lower of the actual deductible or the amount shown above, and the limit applied monthly at 1/2 of the annual limit.
What are the Benefits of a Health Savings Account?

• You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040.
• Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
• The contributions remain in your account from year to year until you use them.
• The interest or other earnings on the assets in the account are tax free.
• Distributions may be tax free if you pay qualified medical expenses.
• An HSA is "portable" so it stays with you if you change employers or leave the work force.

Qualifying for a Health Savings Account
To be an eligible individual and qualify for an HSA, you must meet the following requirements.

• You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month.
• You have no other health coverage except what is permitted under Other health coverage, later.
• You are not enrolled in Medicare.
• You cannot be claimed as a dependent on someone else's tax return.

High Deductible Health Plan (HDHP)
A High Deductible Health Plan has:

• A higher annual deductible than typical health plans, and
• A maximum limit on the sum of the deductible and the annual out-of-pocket medical expenses that must be paid for covered expenses. Out-of-pocket expenses include copayments and other amounts, but do not include premiums.

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