Tuesday, May 7, 2013

For 2014, Higher Limits for HSA Contributions, Out-of-Pocket Expense





The Internal Revenue Service announced higher limits for 2014 on contributions to health savings accounts (HSAs) and for out-of-pocket spending under high-deductible health plans (HDHPs) linked to them.
In Revenue Procedure 2013-25, issued May 2, 2013, the IRS provided the inflation-adjusted HSA contribution and HDHP minimum deductible and out-of-pocket limits, effective for calendar year 2014. The higher rates reflect a cost-of-living adjustment and rounding rules under Internal Revenue Code Section 223.
A comparison of the 2014 and 2013 limits is shown below:


Contribution and Out-of-Pocket Limits for Health Savings Accounts and for High-Deductible Health Plans

For 2014
For 2013

HSA contribution limit (employer + employee)
Single: $3,300
Family: $6,550
Single: $3,250
Family: $6,450
Single: +$50
Family: +100
HSA catch-up contributions (age 55 or older)*

$1,000

$1,000

No change
**
HDHP minimum deductibles
Single: $1,250
Family: $2,500
Single: $1,250
Family: $2,500
No change
HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums)

Single: $6,350
Family: $12,700

Single: $6,250
Family: $12,500

Single: +$100
Family: +$200

Catch-up contributions can be made any time during the year in which the HSA participant turns 55.
** Unlike other limits, the HSA catch-up contribution amount is not indexed; any increase would require statutory change.


The increases in contribution limits and out-of-pocket maximums from 2013 to 2014 were somewhat lower than the increases a year earlier, reflecting the government's calculation of a more modest inflation rate. From 2012 to 2013 the contribution limit rose $150 for individual coverage and $200 for family plans, while maximum out-of-pocket amounts rose $200 for individuals and $400 for families, and HDHP minimum deductible amounts rose $50 for individuals and $100 for families.


Penalties for Nonqualified Expenses
Those under age 65 (unless totally and permanently disabled) who use HSA funds for nonqualified medical expenses face a penalty of 20 percent of the funds used for such expenses. Funds spent for nonqualified purposes are also subject to income tax.

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