The IRS recently announced the health savings account rules and requirements for 2013.
The HSA contribution limits and out-of-pocket maximums have been increased. Also, the minimum required deductibles have increased.
2013 HSA Contribution Limits
- Individuals (self-only coverage) - $3,250 (up $150 from 2012)
- Family coverage - $6,450 (up $200 from 2012)
HDHP minimum required deductibles
- $1,250 for self-only coverage
- $2,500 for family coverage
(Out-of-pocket expenses include deductibles, co-payments, and other amounts, but not premiums)
- $6,250 for self-only coverage
- $12,500 for family coverage
If you use an HSA to pay for unqualified medical expenses, the tax penalty is 20 percent of the HSA distribution.
Background on Health Savings Accounts
A Health Savings Account, or HSA, is a financial account established by an individual or family to pay for qualified medical expenses.
U.S. federal regulations require citizens to have a minimum deductible on their health insurance from all sources in order to make tax-deductible contributions to their Health Savings Account.
HSAs combine the benefits of both traditional and Roth 401(k)s and IRAs for medical expenses. Taxpayers receive a 100% income tax deduction on annual contributions, they may withdraw HSA funds tax-free to reimburse themselves for qualified medical expenses, and they may defer taking such reimbursements indefinitely without penalties.
HSAs are unique—“IRAs on Steroids”—with triple tax advantages:
- Tax-deductible contributions,
- Tax-free accumulation of interest and dividends tax-free, and
- Tax-free distributions for qualified medical expenses.