Health Savings accounts were established under a Medicare reform measure. The law allows anyone younger than 55 to make annual tax-deductible contributions of up to $3,100 per person or $6,250 per family for medical expenses not covered by health insurance, including insurance deductibles, co-pays, and prescriptions. Funds in the accounts can also be used to pay health premiums during a period of unemployment or for health expenses after retirement. Accountholders from 55 to 64 can make higher contributions to the accounts. Annual Contribution Levels for HSAs
- For 2012, the maximum annual HSA contribution for an eligible individual with self-only coverage is $3,100. For family coverage, the maximum annual HSA contribution is $6,250.
- Catch up contribution for individuals who are 55 or older is increased by statute to $1,000 for 2010 and all years going forward.
- 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.
Click here for more information about how you can take advantage of this new account.