Treasury Dept., IRS Issue 2009 Indexed Amounts for Health Savings Accounts:

The Treasury Department and Internal Revenue Service issued new guidance on the maximum contribution levels for Health Savings Accounts (HSAs) and out-of-pocket spending limits for High Deductible Health Plans (HDHPs) that must be used in conjunction with HSAs. These amounts have been indexed for cost-of-living adjustments for 2010 and are included in Revenue Procedure 2009-29.
The new levels are as follows:
New Annual Contribution Levels for HSAs:
•
For 2010, the maximum annual HSA contribution for an eligible individual with self-only coverage is $3,050.
•
For family coverage, the maximum annual HSA contribution is $6,150.
•
Catch up contribution for individual who are 55 or older is $1,000 (set by statute and unchanged from 2009).
•
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.
New Amounts for Out-of-Pocket Spending on HSA-Compatible HDHPs:
•
For 2010, the maximum annual out-of-pocket amounts for HDHP self-coverage increase to $5,950 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $11,900.
Minimum Deductible Amounts for HSA-Compatible HDHPs:
•
For 2010, the minimum deductible for HDHPs increases to $1,200 for self-only coverage and $2,400 for family coverage.

In addition, a fiscal year plan that satisfies the requirements for an HDHP on the first day of the first month of its fiscal year may apply that deductible for the entire fiscal year.*

Revenue Procedure 2009-29 is attached.

Last Updated by the U.S. Treasury Department: January 19, 2010

Advantages of HSAs

Security – Your high deductible insurance and HSA
protect you against high or unexpected medical bills.
Affordability – You should be able to lower your
health insurance premiums by switching to health
insurance coverage with a higher deductible.

Flexibility – You can use the funds in your account to
pay for current medical expenses, including expenses
that your insurance may not cover, or save the money in
your account for future needs, such as:
• Health insurance or medical expenses if unemployed
• Medical expenses after retirement (before Medicare)
• Out-of-pocket expenses when covered by Medicare
• Long-term care expenses and insurance
Savings – You can save the money in your account for
future medical expenses and grow your account through
investment earnings.

Control – You make all the decisions about:
• How much money to put into the account
• Whether to save the account for future expenses or
pay current medical expenses
• Which medical expenses to pay from the account
• Which company will hold the account
• Whether to invest any of the money in the account
• Which investments to make

Portability – Accounts are completely portable,
meaning you can keep your HSA even if you:
• Change jobs
• Change your medical coverage
• Become unemployed
• Move to another state
• Change your marital status

Ownership – Funds remain in the account from year to
year, just like an IRA. There are no “use it or lose it” rules
for HSAs.

Tax Savings – An HSA provides you triple tax savings:
(1) tax deductions when you contribute to your account;
(2) tax-free earnings through investment; and,
(3) tax-free withdrawals for qualified medical expenses.*

Opening Your Health Savings Account

Banks, credit unions, insurance companies and other
financial institutions are permitted to be trustees or
custodians of these accounts. Other financial
institutions that handle IRAs or Archer MSAs are also
automatically qualified to establish HSAs.*

Need More Information about HSAs?

Treasury’s web site has additional information about
Health Savings Accounts, including answers to
frequently asked questions, related IRS forms and
publications, technical guidance, and links to other
helpful web sites. Treasury’s HSA website can be
found through www.treas.gov (click on “Health Savings
Accounts”) or directly at the following address:
http://www.treas.gov/offices/public-affairs/hsa/..*
 
* = courtesy of the U.S. Treasury Department website.