If you have a question or would like to know more about a certain product, service or banking term, please contact us and we will be happy to respond. Plus, we could add your question to our list to help future site visitors!
You Are Here: What are the benefits of Health Savings Accounts?
What are the benefits of Health Savings Accounts?
"HSA" or Health Savings Accounts and High Deductible Health Plans: (per Treasury Dept., IRS Issue 2014 Indexed Amounts for Health Savings Accounts):
The Treasury Department and Internal Revenue Service issued new guidance on the maximum contribution levels for Health Savings Accounts (HSAs) and out-of-pocket spending limits for High Deductible Health Plans (HDHPs) that must be used in conjunction with HSAs. These amounts have been indexed for cost-of-living adjustments for 2014 and are included in Revenue Procedure 2013-25. The new levels follow:
New Annual Contribution Levels for HSAs:
- For 2014, the maximum annual HSA contribution for an eligible individual with self-only coverage is $3,300.
- For family coverage, the maximum annual HSA contribution is $6,550.
- Catch up contribution for individual who are 55 or older is $1,000 (set by statute and unchanged from 2013).
- Individuals who are eligible individuals on the first day of the last month of the taxable year (December for most taxpayers) are allowed the full annual contribution (plus catch up contribution, if 55 or older by year end), regardless of the number of months the individual was an eligible individual in the year. For individuals who are no longer eligible individuals on that date, both the HSA contribution and catch up contribution apply pro rata based on the number of months of the year a taxpayer is an eligible individual.
New Amounts for Out-of-Pocket Spending on HSA-Compatible HDHPs:
- For 2014, the maximum annual out-of-pocket amounts for HDHP self-coverage increase to $6,350 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $12,700.
- Minimum Deductible Amounts for HSA-Compatible HDHPs:
- For 2014, the minimum deductible for HDHPs are $1,250 for self-only coverage and $2,500 for family coverage.
Advantages of HSAs:
- Security – Your high deductible insurance and HSA protect you against high or unexpected medical bills.
- Affordability – You should be able to lower your health insurance premiums by switching to health insurance coverage with a higher deductible.
- Flexibility – You can use the funds in your account to pay for current medical expenses, including expenses that your insurance may not cover, or save the money in your account for future needs, such as:
- Health insurance or medical expenses if unemployed
- Medical expenses after retirement (before Medicare)
- Out-of-pocket expenses when covered by Medicare
- Long-term care expenses and insurance
- Savings – You can save the money in your account for future medical expenses and grow your account through investment earnings.