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Small Business Employee Benefits and HR Blog

Health Savings Account - HSA 2014 Rules & Requirements

The IRS recently announced the health savings account rules and requirements for 2014. The HSA contribution limits and out-of-pocket maximums have been increased. 

HSA Rules and Requirements 2014

2014 HSA Contribution Limits

For calendar year 2014, the annual HSA contribution limits are:

  • Individuals (self-only coverage) - $3,300 (up $50 from 2013)

  • Family coverage - $6,550 (up $100 from 2013)

HDHP minimum required deductibles

The High Deductible Health Plan (HDHP) required deductibles for an HSA did not change from 2013 to 2014:

  • $1,250 for self-only coverage

  • $2,500 for family coverage

Out-of-pocket maximum

The annual out-of-pocket expenses include deductibles, co-payments, and other amounts, but not premiums. The 2014 out-of-pocket maximums are:

  • $6,350 for self-only coverage (up $100 from 2013)

  • $12,700 for family coverage (up $200 from 2013)

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 Accounts (HSA).

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:

  1. Tax-deductible contributions,
  2. Tax-free accumulation of interest and dividends tax-free, and
  3. Tax-free distributions for qualified medical expenses.

The 2014 HSA rules and regulations were released in IRS Revenue Procedure 2013-25.

Related Resources on Health Savings Accounts

Learn the differences between HSAs, HRAs, and FSAs

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