The IRS recently announced the health savings account rules and requirements for 2013.

 

Individuals (self-only coverage)               $3,250 (up $150 from 2012)

Family coverage                                   $6,450 (up $200 from 2012)

A Health Savings Account, or HSA, is a financial account established by an individual or family to pay for unreimbursed medical, dental and vision expenses.

U.S. federal regulations require eligible individuals to have a qualified High Deductible Health Plan for their health insurance 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, dental & vision expenses. Taxpayers receive a 100% income tax deduction on annual contributions, they may withdraw HSA funds tax-free to reimburse themselves for qualified 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, dividends and capital gains, and
3. Tax-free distributions for qualified expenses

If you use an HSA to pay for ineligible expenses, the distribution is included in your taxable income. If the ineligible distribution occurs before age 65 there is an additional 20% penalty tax. 

 

Please contact our office should you have any questions.