A Health Savings Account is really a combination of a health insurance policy meeting minimum US Treasury policy design requirements called a High Deductible Health Plan (HDHP) and a separate custodial savings account for future medical expenses called a Health Savings Account (HSA). Congress created the HSA as a way to cover your future medical expenses, and it is subject to IRS regulations and guidelines. A health insurance company or an insurance plan usually provides the qualified health insurance policy. A licensed HSA administrator and financial services company, such as a bank, usually acts as the custodian and administers the savings account portion of the HSA.
You can save up to the maximum contribution limit of $2,900 for an individual HSA and $5,800 for a family HSA regardless of the HDHP deductible for 2008. These limits are also subject to annual cost-of-living adjustments. Amounts are no longer pro-rated if you start the plan mid-year. You can now make the full year's contribution even if you start as late as December. Individuals age 55 to age 65 can contribute an additional $900 over the above limits in 2008.
Consult your tax advisor for additional information concerning plan deductibility. To learn more about Health Savings Accounts, click here.
January 5, 2008
Health Savings Accounts - New Limits for 2008
An Insurance Policy and a Special Savings Account.