Who is eligible?
- To be eligible to establish a health savings account an individual must
- Be covered under a high deductible health plan
- May not be covered under any health plan that is not a high deductible health plan
- Not be entitled to benefits under Medicare
- Not be claimed as a dependent on another person’s tax return
Who can contribute and how much is deductible?
Contributions are 100% tax deductible up to the size of the HDHP deductible within certain limits. This means a tax-deductible contribution of individuals ranging between $1,000 and $2,600 and between $2,000 and $5,150 for families. HSA’s allow for catch up contributions for individuals age 55-64.
Advantages
- Contributions to the account are tax deductible
- Amounts in an HSA belong to the individual and are fully portable
- Amounts in an HSA earn tax-free interest
- Unused amounts in the account at year-end remain available for future years
- Distributions are not taxed if used for qualifying medical expenses
HSA funds not withdrawn accumulate tax-free interest until age 65. At age 65 you have the option to withdraw them for any purpose and pay ordinary income taxes.
|
