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subject: 2010 Updates For Health Savings Accounts [print this page]


A Health Savings Account, or HSA, is a of health insurance plan that allows individuals and families to reduce their annual taxable income while, simultaneously, storing money away that they can use to pay for qualifying medical expenses. Much like an IRA, the money that an individual saves in a HSA can be invested into high-interest investments, including stocks, bonds, money market accounts, CDs, and more. These investments are either tax-deductible or tax-deferred, depending upon how an individual chooses to use the money from his or her savings account.

There are annual fees and requirements that must be met in order for an individual or family to have a Health Savings Account. These include minimum deductibles, maximum contributions, and maximum out-of-pocket expenses. However, in order to have a HSA in the first place, an individual needs to have a qualifying health insurance plan, which is a health insurance plan that has a high deductible. These health insurance plans can be obtained from a wide variety of health insurance providers.

Changes coming in 2010

There are several increases to prices for Health Savings Accounts for 2010, including increases in the minimum deductible, maximum deductible and maximum out-of-pocket expenses. These changes are as follows:

The minimum deductible will increase in 2010 to $1,200 for individuals and $2,400 for families. This is the minimum deductible allowable for the high deductible health insurance plan. The 2009 rates were $1,250 for individuals and $2,300 for families.

The maximum contribution that individuals and families can make each year towards the HSA will be $3,050 for individuals and $6,150 for families. Individuals and families are not required to make the maximum annual contribution towards their HSA, but the amount of their contributions will be reduced from their annual income tax burdens. HSA participants can also make contributions to their Health Savings Accounts to cover a specific medical expense that they wish to be tax deductible by reimbursing themselves for their own medical expenses from the funds in their Health Savings Accounts. The 2009 maximum contributions were $3,000 for individuals and $5,950 for families.

Catch-up contributions will stay the same for 2010. These amounts are $1,000 for both individuals and families for 2009 and 2010. A catch-up contribution is an additional contribution that individuals can make towards their Health Savings Accounts if they are between the ages of 55 and 65.

Maximum out-of-pocket expenses will increase in 2010 as well. For individuals, the maximum out-of-pocket expenses will increase to $5,950. For families, the maximum out-of-pocket expenses will increase to $11,900. The 2009 maximum expenses were $5,800 for individuals and $11,600 for families.

Individuals and families who are considering opening a Health Savings Account can benefit not only by being able to reduce their annual income tax burdens, but they will also be able to grow their savings accounts. The growth on their accounts is tax-deductible if they use the money from their Health Savings Accounts to pay for qualifying medical expenses. However, if they choose to use the money for other expenses, they will simply have to pay taxes only when they make their withdrawals.

Many individuals and families can save a significant amount of money each year by enrolling in Health Savings Accounts. To find out how much they can save, individuals and families can speak with a Health Savings Account consultant or check rates with different health insurance companies that offer Health Savings Account plans.

by: Wiley Long




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