What Are Health Savings Accounts?
Health Savings Accounts, or HSAs as they are commonly known, are tax-exempt accounts used to help those who have high deductible health insurance plans. These accounts are designed to offset some of the costs of medical care and treatment. They were created in 2003 to replace the Medical Savings Account System. An HSA can be set up for an individual account holder or for family coverage. Generally, most adult tax payers covered by a high deductible health plan (HDHP) may qualify for an HSA, so long as they are not enrolled in Medicare, or claimed as dependents on another tax payer’s return. HSAs require the use of a trustee, such as a bank or insurance company, and must be linked with a qualifying HDHP.
Much like a traditional savings account you may open at a bank, funds remain in an HSA until the account holder uses them. In other words, there is no “use it or lose it” deadline each year, as encountered with most flex spending plans. Furthermore, HSAs are not set up through an employer, so account holders retain them if they change jobs or leave the workforce. If an employer does make contributions to your HSA, you may exclude those contributions from your gross income on your tax return.
What’s New in HSAs for 2013?
The IRS has announced new contribution limits and other important figures for both individual and family coverage accounts in 2013. These new figures are slightly higher than the 2012 rates, in order to adjust for higher costs of living. Below is a summary of the changes for 2013:
| 2012 | 2013 | Change | |
| Total HSA contribution limit (employee + employer) | Individual: $3,100Family: $6,250 | Individual: $3,250Family: $6,450 | Individual: + $150Family: + $200 |
| Minimum required HDHP deductible | Individual: $1,299Family: $2,400 | Individual: $1,250Family: $2,500 | Individual: + $50Family: + $100 |
| HDHP maximum out-of-pocket expenses | Individual: $6,050Family: $12,100 | Individual: $6,250Family: $12,500 | Individual: + $200Family: + $400 |
For Further Information
If you are interested in learning more about Health Savings Accounts and their alternatives, this IRS publication is a good resource. For instructions on claiming your HSA on your 2012 tax return, click here.
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