Health Savings Account – HSA 2013 Rules & Requirements

Health Savings Account – HSA 2013 Rules & Requirements

The IRS recently announced the health savings account rules and requirements for 2013.

The HSA contribution limits and out-of-pocket maximums have been increased. Also, the minimum required deductibles have increased.

2013 HSA Contribution Limits

  • Individuals (self-only coverage) – $3,250 (up $150 from 2012)
  • Family coverage – $6,450 (up $200 from 2012)

HDHP minimum required deductibles

  • $1,250 for self-only coverage
  • $2,500 for family coverage

Out-of-pocket maximum

(Out-of-pocket expenses include deductibles, co-payments, and other amounts, but not premiums)

  • $6,250 for self-only coverage
  • $12,500 for family coverage

If you use an HSA to pay for unqualified medical expenses, the tax penalty is 20 percent of the HSA distribution.

Background on Health Savings Accounts

A Health Savings Account, or HSA, is a financial account established by an individual or family to pay for qualified medical expenses.

U.S. federal regulations require citizens to have a minimum deductible on their health insurance from all sources in order to make tax-deductible contributions to their Health Savings Account (HSA).

HSAs combine the benefits of both traditional and Roth 401(k)s and IRAs for medical expenses. Taxpayers receive a 100% income tax deduction on annual contributions, they may withdraw HSA funds tax-free to reimburse themselves for qualified medical expenses, and they may defer taking such reimbursements indefinitely without penalties.

HSAs are unique—“IRAs on Steroids”—with triple tax advantages:

  1. Tax-deductible contributions,
  2. Tax-free accumulation of interest and dividends tax-free, and
  3. Tax-free distributions for qualified medical expenses.

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