Lindemeyer CPA is digging into a popular form of medical savings account offered by many employers especially when deductibles are set at a high out of pocket cost.
Health Savings Accounts (HSA) are becoming increasingly popular. If your employer offers an HSA as part of its benefits package you may be wondering how they work. HSAs are available to taxpayers enrolled in a high-deductible health plan (see explanation below) with the account funds not subject to federal income tax at the time of deposit.
High Deductible Health Plans – these plans are defined as a health plan with an annual minimum deductible of $1250 for individuals and $2500 for family coverage with annual out-of-pocket expenses (deductibles co-payments and other amounts excluding premiums) which do not exceed $6350 for individuals or $12700 for family coverage.
Tax Deduction Limitations – Last month the IRS issued tax changes based on inflation for HSAs. If your health plan meets the above high deductible health plans requirements you may be eligible for a tax deduction in 2014. The annual deduction limitation on contributions to HSAs is $3300 for individuals and $6550 for families. For taxpayers 55 years of age and older you can put in an additional $1000 contribution for a total contribution of $4300 for individuals and $7550 for families.
If you have questions as to how enrolling in an HSA could affect your taxes please contact Lindemeyer CPA for more information.