Monday, July 22, 2013

Health Savings Accounts – Deduction Limits Change for 2014

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
These limits are up slightly from the 2013 limits of $3,250 for an individual-only plan and $6,450 for a family plan. Check with us if you have any questions on whether you are utilizing your plan effectively.

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