If you’re not familiar with Health Savings Accounts (HSAs), let me explain what they are before talking about the changes for 2014. An HSA is linked with a high-deductible health insurance plan and the insured individual pays into the savings account with pre-tax dollars and then uses those dollars to pay deductibles, co-payments and other related items. The individual is not able to use the money to pay the actual insurance premium. Health plans that qualify include those with a deductible of $1,250 or more for an individual-only plan and $2,500 for a family plan. In addition, annual out-of-pocket expenses must be less than $6,350 for an individual-only plan and $12,700 for a family plan.
For the 2014 tax year, the limitation on deductions for the year will be:
- $3,300 for an individual-only plan
- $6,550 for a family plan