Are Health Savings Accounts (HSAs) Changing in 2013?
Health Savings Accounts (HSAs) are special tax-advantaged savings accounts, designed for use with a HSA-eligible, high-deductible health insurance plan. If you have an HSA-eligible health plan, you can open an HSA and deposit a certain amount of money into it per year on a pre-tax or tax-deductible basis to pay for qualified medical expenses.
Money in the account is yours to keep, rolls over from year to year and can earn interest on a tax-free basis. If your employer has an HSA program, they can also deposit money into the account for you, within certain limits.
For the past few years, the big topic in health insurance has been the Affordable Care Act (“Obamacare”), but HSAs are still around and still a good deal for many consumers.
However, there are a few important changes coming for HSAs in 2013:
The minimum deductible for HSA-eligible plans is increasing in 2013:
For the past three years, only health insurance plans with a minimum annual deductible of $1200 (for individual coverage) or $2400 (for family coverage) could be used with Health Savings Accounts. In 2013, the minimum qualifying deductible is being increased to $1250 (individuals) and $2500 (families). Though the increase is minimal, this means that some existing HSA-eligible plans may no longer be HSA-eligible as of January 1, 2013. If you have an HSA, check your health plan’s annual deductible to make sure it still meets the minimum amount for 2013. Otherwise, you will no longer be able to deposit money into your HSA. If your plan no longer meets the minimum deductible, contact your health insurance company, a licensed agent like eHealthInsurance.com, or your HR department (for employer plans) to see if there’s another plan available to you that will still meet the new HSA criteria.
The contribution limits for HSAs is increasing in 2013:
As it does almost every year, the maximum tax-deductible contribution for HSAs is going up again for 2013. For 2013, the maximum contribution is $3250 (for individual coverage) or $6450 (for family coverage), an increase of $150 and $200, respectively, from 2012. This is the maximum amount of tax-deductible money you can save in your HSA next year. With these limits in mind, we recommend that consumers fund their HSAs to the max every year if they want to take full advantage of their HSAs over the long term. Remember, money saved in your HSA can be invested to grow year over year and is yours to keep. So long as you save that money for qualified medical expenses, you’ll never pay taxes on it. People age 55 and over can save an additional $1000 per year in an HSA (the same for both individual and family coverage) during 2013. We tell people older consumers to think of their HSA as a retirement fund for medical expenses.
HSAs are becoming even more attractive vs. FSAs in 2013:
Due to a provision of the health reform law, the maximum pre-tax contribution to an FSA for 2013 will be lowered to $2500. If you’re a heavy FSA user and that’s not enough for your needs next year, consider switching to an HSA-eligible health insurance plan and opening a Health Savings Account. You may have to wait for your employer’s open enrollment period to make changes, so contact your HR department.