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2018 HSA Contribution Limits
The Internal Revenue Service recently announced the 2018 inflation-adjusted contribution limits for health savings accounts, also known as HSAs. HSAs are tax-advantaged savings accounts usually held at a bank or other financial institution. When combined with a qualified high-deductible health plan (HDHP), HSAs are a good way to help pay for future medical expenses.

Each year, the IRS adjusts the contribution amounts to keep pace with inflation. When compared to the 2017 limits, the 2018 HSA contribution limits for individual coverage increased $50, and $150 for family coverage. Furthermore, the HDHP minimum deductible and the HDHP maximum out-of-pocket also increased. Lastly, catch-up contributions for individuals 55 remained the same at $1,000.

The table below illustrates the 2018 HSA contribution limits:

2018 HSA Contribution Limits

 IndividualFamily
Contribution Limits$3,450$6,900
HDHP Minimum Deductible$1,350$2,700
HDHP Out-of-Pocket Maximum*$6,650$13,300
Catch Up Contribution (Age 55+)$1,000
*Includes deductibles, copayments, and other amounts, but not premiums.
For more detailed information, refer to the IRS 2018 HSA Guidance document for more details.

Portability

A key feature of HSAs is their portability. Portability, by definition, is a U.S. employee’s right to keep or maintain certain benefits when switching employers or when leaving the workforce (retiring). Therefore, if you change employers or leave the workforce, you can still keep your HSA. Equally important, funds left over at the end of the year are carried over to the following year. In contrast, a Flexible Spending Account (FSA), you forfeit any money not used within the plan year.

Taxes & Penalties

If you withdraw money from your HSA to pay for non-qualified medical expenses, the amount will be subject to a penalty of 20% in addition to ordinary income tax. However, if the money is used for qualified medical expenses, then the withdrawals are tax free. UPDATE: The American Health Care Act, healthcare reform bill that just passed the House, would cut the penalty back to the pre-Obamacare amount of 10%. Also worth noting, the bill will reestablish the right to pay for over-the counter-medications without a prescription using your health savings account.

Additional HSA Benefits / Information

  • The interest or other earnings on the assets in the account are tax free.
  • 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.
  • HSA contributions for the 2018 tax year may be made until April 15, 2019.

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2016 HSA Contribution Limits
Earlier this month, the Internal Revenue Service (IRS) released the HSA contribution limits for for 2016. The IRS also announced limits for out-of-pocket maximums for high-deductible health plans (HDHPs). The annual deductible for both individuals and families will not change, nor will the annual contribution limits for individuals.

However, there will be slight increases in the annual out-of-pocket limits for both individuals and families, as well as the annual contribution limit for families.

A comparison of HSA contribution limits for 2016 to previous years is shown below:

HSA Contribution Limits For 2016

  2016 2015 2014
Coverage Individual /Family
Contribution Limits $3,350 / $6,750 $3,350 / $6,650 $3,300 / $6,550
Catch Up Contribution (Age 55+) $1,000
HDHP Out-of-Pocket Maximum* $6,550 / $13,100 $6,450 / $12,900 $6,350 / $12,700
*Includes deductibles, copayments, and other amounts, but not premiums.
For more detailed information, refer to the IRS 2016 HSA Guidance document for more details.

Penalties for Non-Qualified Expenses

HSA funds used for non-qualified medical expenses will be subject to a penalty of 20%. In addition, these funds will also be subject to ordinary income tax.

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2015 Health Savings Account Contribution Limits
The IRS released the 2015 inflation-adjusted contribution amounts for Health Savings Accounts (HSAs). While High Deductible Health Plan’s (HDHP) minimum required deductibles remain the same as 2013, the HSA contribution limits and HDHP out-of-pocket maximums are up slightly over 2014.

What is a Health Savings Account (HSA)?

A health savings account, also known as a HSA, is a tax-advantaged savings account available to individuals and families who are enrolled in a High Deductible Health Plan (HDHP). HSAs have recently become an increasingly popular concept among both consumers and regulators. With health costs sky-rocketing, HSAs encourage saving for future health care expenses.

Qualifying for an HSA

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).
  • You have no other health coverage except what is permitted.
  • You are not enrolled in Medicare.
  • You are not as a dependent on someone else’s 2013 tax return.

Contributing to an HSA

The savings account can be opened at most banks and credit unions. The funds contributed to an HSA are not subject to federal income tax at the time of deposit and can be used to help pay for qualified medical and dental expenses (See IRS Publication 502 for a detailed list) at any time without any federal tax liability.

Unlike a Flexible Spending Account (FSA), funds in a Health Savings Account roll over and accumulate year to year if not spent.

2015 Health Savings Account (HSA) Contribution Limits

  2015 2014 2013
Coverage Individual /Family
Contribution Limits $3,350 / $6,650 $3,300 / $6,550 $3,250 / $6,450
Catch Up Contribution (Age 55+) $1,000
HDHP Out-of-Pocket Maximum* $6,450 / $12,900 $6,350 / $12,700 $6,250 / $12,500
*Includes deductibles, copayments, and other amounts, but not premiums.
For more detailed information on HSA plans and taxes, visit the U.S. Treasury Department’s website or talk with your tax advisor.

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As the dust begins to settle after the Supreme Court ruling on the constitutionality of Patient Protection and Affordability Care Act. People are beginning to wonder how “Obamacare” will impact them. One of the tools that individuals have used to help control their health care costs may not be as valuable when the legislation is in enacted in 2014.

With healthcare costs continuing to increase, individuals have used Health Savings Accounts (HSA) to help manage their health care costs by paying for deductibles and other medical expenses with tax-free money set aside in an HSA, and preserving the use of health insurance for more catastrophic events. This has been an effective strategy because insurance companies offer High Deductible Health Plans (HDHPs) with low premiums for those willing to pay for routine health expenses on their own. Obamacare threatens this approach by implementing minimum coverage thresholds that insurance plans must satisfy in order to operate.

Currently, using HDHPs in conjunction with HSAs, individuals can contribute money to their HSAs to help protect themselves in the event they have to pay the high deductible. Money is contributed to an HSA and withdrawn tax-free when used to pay for qualified medical expenses. Unlike other health savings vehicles, such as an FSA, the funds in an HSA never expire year to year, so consumers can accumulate substantial funds for future medical expenses.

Under the PPACA, the “actuarial value” threshold will divide health plans into tiers to determine the coverage threshold for that plan. For example, a health insurance plan at the “gold” tier, must have an actuarial value of 80%, meaning the plan must pay for 80% of each insured’s medical expenses. The lowest tier, bronze, must have an actuarial value of 60%, or cover 60% of medical expenses. HDHPs currently cover a lower a percentage of an insured’s medical expenses and will be required to provide higher reimbursement rates with lower deductibles, which will in turn cause higher premiums. This not only jeopardizes the future of the HDHPs, but HSAs as well, because, currently, HSAs can only be used with HDHPs.

This is important to note. For many healthy Americans, using HDHPs, which allow coverage at a low premium, together with HSAs, has been a way to manage their health care costs. While the sole intention of the PPACA is to not eliminate HSAs, in theory, it does make them less valuable in the future.

Source: Advisor One

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