IRS Issues 2009 Health Savings Accounts (HSAs) Limits

The IRS has issued guidance specifying 2009 inflation-adjusted amounts for health savings accounts (HSAs):

The limit on HSA contributions will be $3,000 (up from $2,900) for self-only coverage, or $5,950 (up from $5,800) for family coverage.
A high deductible health plan (HDHP) must have an annual deductible of at least $1,150 (up from $1,100) and annual out-of-pocket expenses of not more than $5,800 (up from $5,600) for self-only coverage, or an annual deductible of at least $2,300 (up from $2,200) and annual out-of-pocket expenses of not more than $11,600 (up from $11,200) for family coverage.

What is a health savings account (HSA)?

The Medicare Prescription Drug, Improvement and Modernization Act of 2003, which was signed into law December 8, 2003, created Health Savings Accounts (HSAs). Individuals participating in high deductible health plans are allowed to make tax deductible contributions to an HSA to fund lifetime medical needs. HSAs can be established for taxable years beginning after December 31, 2003.

HSAs are established for the benefit of an individual, are owned by that individual and are portable.

High-deductible health plan. Generally, a high deductible health plan (HDHP) is a health plan that satisfies certain requirements with respect to deductibles and out-of-pocket expenses. For self-only coverage, an HDHP has an annual deductible of at least $1,100 ($1,150 for 2009) and annual out-of-pocket expenses required to be paid (deductibles, co-payments and other amounts, but not premiums) not exceeding $5,600 (5,800 for 2009). For family coverage, an HDHP has an annual deductible of at least $2,200 ($2,300 for 2009) and annual out-of-pocket expenses required to be paid that do not exceed $11,200 ($11,600 for 2009). Also for family coverage, a plan is an HDHP only if, under the terms of the plan and without regard to which family member or members incur expenses, no amounts are payable from the HDHP until the family has incurred annual covered medical expenses in excess of the minimum annual deductible.

Preventive care. Generally, an HDHP may not provide benefits for any year until the deductible is satisfied. However, there is a safe harbor for the absence of a preventive care deductible. An HDHP may provide preventive care benefits without a deductible or with a deductible below the minimum annual deductible. Preventive care includes, but is not limited to:

Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals;
Routine prenatal and well-child care;
Child and adult immunizations;
Tobacco cessation programs;
Obesity weight-loss programs; and
Screening services.

Preventive care does not generally include any service or benefit intended to treat an existing illness, injury, or condition.

Comparison to medical savings accounts. HSAs are similar to medical savings accounts (MSAs). However, MSA eligibility has been restricted to employees of small businesses and self-employed individuals. HSAs are open to everyone with a high deductible health insurance plan.

Reprinted with permission. © CCH

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