Health Savings Accounts

Health Savings Accounts can be used to pay for any qualified medical expenses. They are set up by anyone covered under a high deductible health plan. Contributions are not subject to self employment (social security taxes). Since so many people have difficulty taking medical expenses on Sch A of the tax return, this is often a way to pay for medical expenses with pretax dollars, and therefor save some money. Individuals cannot be dependents on another’s tax return or enrolled in Medicare to participate in HSAs. Contributions can be made by the employer or employee. Self employed individuals can also establish HSAs.

The maximum deduction for 2013 contributions is $3250 for self-only coverage, increasing to $3300 in 2014.

Family coverage deductions are $6450 in 2013 and $6550 in 2014.

High deductible plans must have an annual deductible of at least $1250 for singles and $2500 for families to qualify. In addition, according The Elite Quarterly, “the 2014 annual out-of-pocket expense maximums of $6,350 for self-only coverage and $12,700 for family coverage increased by $100 and $200, respectively, from 2013.”

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