IRS releases 2014 HSA limits

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IRS releases 2014 HSA limits
IRS releases 2014 HSA limits

On May 2, the Internal Revenue Service announced the 2014 inflation-adjusted amounts for health savings accounts (HSAs).

The HSA contribution limits and out-of-pocket maximums will increase slightly for the 2014 calendar year compared to those currently present in 2013. However, the minimum-required deductibles for high-deductible health plans will remain the same.

HSAs are tax-advantaged savings accounts that are paired with HDHPs and help people save money on eligible medical expenses. This kind of plan will be offered through the health insurance exchanges, allowing potential enrollees to compare its benefits with other options.

HSA contribution limits:

  • Individuals (self-only coverage) – $3,300 (up $50 from 2013)
  • Family coverage – $6,550 (up $100 from 2013)

HDHP minimum-required deductibles:

  • $1,250 for self-only coverage (no change from 2013)
  • $2,500 for family coverage (no change from 2013)

Out-of-pocket maximum:

  • $6,350 for self-only coverage (up $100 from 2013)
  • $12,700 for family coverage (up $200 from 2013)

Out-of-pocket expenses include deductibles, co-payments and other amounts, but not premiums. The Patient Protection and Affordable Care Act allows individuals to be reimbursed for some over-the-counter drugs if they obtain a prescription from a doctor. In addition, if HSA holders use their tax-advantaged funds for an item or service that does not qualify as an eligible medical expense, they will face a 20 percent tax penalty on their HSA distribution.

Tax-exempt funds stashed in HSAs roll over from year to year and are portable regardless of the account holder's employment status.

*Note: Content provided is not intended as legal or tax advice.