Tax Advantages
Funds
deposited into your HSA account can reduce your taxable income by the
amount you contribute. This is a post tax "above-the-line" deduction.
You can also
make contributions to your HSA on a pre-tax basis if your employer offers a
Section 125 Cafeteria Plan. The deduction is taken out of your paycheck,
prior to taxes being applied, and deposited into your HSA account.
| 2011 IRS
Contribution Limits |
Single Plan |
Family Plan |
|
| Minimum Deductible |
$1,200 |
$2,400 |
(The IRS sets annual requirements for the
minimum deductible and maximum
out-of-pocket expense for HSA
compatible health plans.) |
| Maximum Out-of-Pocket |
$5,950 |
$11,900 |
| Contribution Limit |
$3,050 |
$6,150 |
|
| Catch-up Contribution (55 or older) |
$1,000 |
$1,000 |
(Individuals age 55 or over can make catch-up contributions) |
The
interest on HSA funds grows on a tax-deferred basis and is not
considered taxable income when the funds are used for
eligible medical expenses.
(The only time you pay taxes or penalties on your HSA funds is if you make a
non-eligible purchase or if you contribute more than the yearly maximum
contribution limit - however, both misuses can be corrected free of tax
penalties by April 15th of the following calendar year.)
Eligible
medical expenses (such as prescriptions, dental or vision care) can be
purchased tax-free when you use your HSA.
