IRS announces 2010 inflation adjustments for HSAs
The IRS has provided the annual limits on deductible contributions to health savings account (HSAs) for 2010. The deduction limits for self-only and family coverage are indexed for inflation.
HDHPs
HSAs are very taxpayer friendly in an effort to reward those who take more out-of-pocket risks in managing their health care. Distributions from HSAs that are used for qualified medical expenses are tax-free. Moreover, not only are premiums for HDHPs lower than for comprehensive health insurance, employees in HDHP plans at least in theory can take greater control over their health care dollars.
An HDHP must have a deductible of a stated minimum for both individual and family coverage. While the "high-deductible" feature requires significant upfront, out-of-pocket costs, HDHPs must also put a cap on the participant’s total put-of-pocket risk. The plan must limit out-of-pocket expenses paid by the individual or family members for covered individuals, which are also indexed for inflation.
Self-only coverage
For 2010, the annual limit on pre-tax or deductible contributions to an HSA for self-coverage only will rise to $3,050 for 2010. This is up from a limit of $3,000 for 2009. The limit applies to an individual with self-only coverage under a high-deductible health plan (HDHP).
For 2010, an HDHP providing individual coverage must have an annual deductible of at least $1,200, an increase from $1,150 in 2009.
Family coverage
Additionally, the annual limit for deductible contributions for an individual with family coverage under an HDHP will rise to $6,150 for 2010, up from $5,950 for 2009.
HDHPs providing family coverage must have an annual deductible of at least $2,400, for 2010. This is an increase from $2,300 for 2009.
Out-of-pocket expenses
An HDHP must limit out-of-pocket expenses for a plan providing self-only coverage at $5,950 (up from $5,800 for 2009). HDHPs providing family coverage must cap out-of-pocket expenses at $11,900 (up from $11,600 for 2009). These amounts include deductibles, co-payments, and other amounts, but not premiums.
(Rev. Proc. 2009-29)
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