The Health Savings Account (HSA) was established as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as a savings plan for individuals with high-deductible health plans (HDHP). To qualify in 2009 as a HDHP, your plan must satisfy both of the following:
Self-only Coverage: minimum annual deductible of at least $1,150 and an annual out-of-pocket maximum of $5,800.*
Family Coverage: minimum annual deductible of at least $2,300 and an annual out-of-pocket maximum of $11,600.*
Self-only Coverage: Maximum allowable contribution is $3,000*
Family Coverage: Maximum family contribution is $5,950*
The catch-up contribution amount for those age 55 or older (but under age 65) is $1,000, in addition to the standard contribution limits.
* Note: These dollar figures are for 2009 limits, they are typically indexed (adjusted upwards) each year to account for inflation.
Funds withdrawn from the account to pay for medical expenses in the future are tax-free as long as the expenses are considered qualified medical expenses. At age 65 (when Medicare starts), contributions are no longer allowed. If the individual does not use the funds for qualified medical expenses, withdrawals can be made for retirement income (after age 65) and they are taxed at your then current ordinary income tax rate. (For more on the HSA, see Fighting The High Costs Of Healthcare.)
This question was answered by Steven Merkel
Read about the impact of Medicare and Medicaid on the drugs sector in the United States and how some doctors get rich by ...
Learn how banks determine your discretionary income, and discover why it is important to know your discretionary income even ...
Learn about the ethical argument behind government subsidies.
Learn where to report financial accounting fraud if you suspect an accountant is in violation of the generally accepted accounting ...
A series of domestic programs designed to help the United States ...
A term used in medical accounting to describe the amount of money ...
Directors and officers liability insurance covers you if you're ...
Accounts held by an individual at a financial institution that ...
Expenses that are paid by the insured in excess of an insurance ...
A group of businesses or organizations that join together to ...