Health Savings Accounts (HSAs) were established as part of the Medicare Prescription Drug, Improvement and Modernization Act which was signed into law by President Bush in December 2003. A person with a health savings account (HSA) must also have a qualified High Deductible Health Plan (HDHP).
Funds contributed to the HSA are contributed on a pre-tax basis (similar to a Flex-Spending Plan or Cafeteria account) so they reduce your amount of taxable income. Unlike a Flex-Spending account, the funds in an HSA roll over from year to year.
High Deductible Health Plans are plans with a minimum deductible of $1,100 for Self and $2,200 for Self and Family coverage. The maximum amount out-of-pocket limits for high deductible health plans is $5,600 for self and $11,200 for Self and Family enrollment. These are the 2008 amounts and are adjusted for inflation annually.
One advantage of an HSA is that the funds can be invested and grow while in the HSA. Funds can be withdrawn from the HSA without advance approval from the plan advisor or administrator. Once withdrawn, funds are not subject to taxation if used for qualified medical expenses.
There are contribution limits yearly to health savings accounts (the government does not want to miss out on too many taxes).
According to IRS Publication 969, "Health Savings Accounts and Other Tax-Favored Health Plans", you can make contributions to your HSA for 2008 until April 15, 2009 and so on each year.
YEAR Contribution LimitContribution Limit:
(Single) (Family)
2008 $2900 $5800
2009 $3000 $5950
Funds contributed to the HSA are contributed on a pre-tax basis (similar to a Flex-Spending Plan or Cafeteria account) so they reduce your amount of taxable income. Unlike a Flex-Spending account, the funds in an HSA roll over from year to year.
High Deductible Health Plans are plans with a minimum deductible of $1,100 for Self and $2,200 for Self and Family coverage. The maximum amount out-of-pocket limits for high deductible health plans is $5,600 for self and $11,200 for Self and Family enrollment. These are the 2008 amounts and are adjusted for inflation annually.
One advantage of an HSA is that the funds can be invested and grow while in the HSA. Funds can be withdrawn from the HSA without advance approval from the plan advisor or administrator. Once withdrawn, funds are not subject to taxation if used for qualified medical expenses.
There are contribution limits yearly to health savings accounts (the government does not want to miss out on too many taxes).
According to IRS Publication 969, "Health Savings Accounts and Other Tax-Favored Health Plans", you can make contributions to your HSA for 2008 until April 15, 2009 and so on each year.
YEAR Contribution LimitContribution Limit:
(Single) (Family)
2008 $2900 $5800
2009 $3000 $5950