As part of the Medicare Modernization Act signed into law December 8, 2003, Health Savings Accounts are entering their second decade.
To be eligible for an HSA, you must first be covered by a “qualified” High Deductible Health Plan; that is, one with a deductible of at least $1250 for single coverage, $2500 for family.
Such plans can be found both in and out of the ACA Marketplace.
Tax deductible contribution limits for 2014 are $3,300 for those with single coverage; $6,550 for family coverage. Individuals over age 55 are allowed an additional $1,000 of “catch up” contributions.
Not only do contributions to HSAs reduce your taxable income, but interest earned is tax free. And, money withdrawn for qualified health care costs is also not taxed. (For downloadable detail, click HERE.)
It’s no wonder that HSAs continue to grow in popularity. A 2013 America’s Health Insurance Plans survey showed 15.5 million Americans are covered by HSA Plans, a 15% increase over 2012.