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IRS Sets 2013 HSA Contribution Limits

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IRS Sets 2013 HSA Contribution Limits

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The IRS has announced adjustments that affect health savings accounts in 2013.

The HSA contribution limits and high deductible health plan out-of-pocket maximums are up slightly over 2012. For the first time in three years, the HDHP minimum required deductibles have increased.

HSAs are tax-exempt accounts that help people save money for eligible medical expenses. In order to qualify for an HSA, the policyholder must be enrolled in an HSA-qualified high deductible health plan, and must not be covered by other non-HDHP health insurance or Medicare, and cannot be claimed as a dependent on someone else’s tax return.

HSA contribution limits for 2013

:
  • Individuals (self-only coverage) - $3,250 (up $150 from 2012)
  • Family coverage - $6,450 (up $200 from 2012)HDHP minimum required deductibles:
  • $1,250 for self-only coverage
  • $2,500 for family coverage
Out-of-pocket maximum:

(Out-of-pocket expenses include deductibles, co-payments, and other amounts, but not premiums)

  • $6,250 for self-only coverage
  • $12,500 for family coverage

Under guidelines implemented in the Protection and Affordable Care Act, over-the-counter drugs may only be reimbursed if they have a prescription. If a policyholder uses an HSA to pay for items or services that aren't qualified medical expenses, the tax penalty is 20 percent of the HSA distribution.

What are qualified HSA expenses?

Qualified medical expenses are eligible for reimbursement through your HSA as long as they are not reimbursed through insurance or other sources. The examples and requirements stated in this flyer are subject to change by the IRS. This list includes some examples of qualified medical expenses:

  • Acupuncture
  • Alcoholism treatment
  • Ambulance services
  • Artificial limb or prosthesis
  • Artificial teeth
  • Birth control pills
  • Braille books/magazines (portion of costs)
  • Car adaptations (for a person with a disability)
  • Chiropractors
  • Christian science practitioners
  • Contact lenses (including saline solution and cleaner)
  • Crutches
  • Dental treatment (x-rays, fillings, extractions, dentures, braces, etc.)
  • Diagnostic devices (such as a blood sugar test kit)
  • Doctor’s fees
  • Drug addiction treatment
  • Eyeglasses (including eye examinations)
  • Eye surgery (including laser eye surgery)
  • Fertility enhancement (including in-vitro fertilization)
  • Guide dog (for visually-impaired or hearing-impaired)
  • Hearing aids and hearing aid batteries
  • Hospital services (including meals and lodging)
  • Insulin
  • Laboratory fees
  • Lactation assistance supplies
  • Prescription medicines or drugs
  • Nursing home costs
  • Nursing services
  • Operations or surgery
  • Psychiatric care
  • Psychologist
  • Telephone equipment for hearing-impaired
  • Telephone equipment for visually-impaired
  • Therapy or counseling
  • Transplants
  • Transportation for medical care
  • Vasectomy
  • Wheelchair
  • X-rays

Paying for qualified medical expenses such as doctor’s visits and prescription medications is simple and tax-free with an HSa The money your clients contribute to an HSA is tax-deductible and can be used to pay for qualified medical expenses not only for themselves, but also for the spouse and tax dependents.

Once you put money in your HSA, you can use it to pay for qualified medical expenses now, or save and grow your balance to use later in life or in retirement—all tax-free. Remember to contribute up to the maximum annual amount allowed by the IRS to maximize your tax savings. The maximum allowed for 2012 is $3,100 for single coverage and $6,250 for family coverage.

Examples of other expenses that DO NOT qualify for reimbursement through an HSA

  • Babysitting, childcare, and nursing services for a normal, healthy baby
  • Controlled substances obtained in violation of federal law
  • Cosmetic surgery
  • Electrolysis or hair removal
  • Funeral expenses
  • Hair transplant
  • Health club dues
  • Household help
  • OTC medications (without a doctor’s prescription)
  • Personal use items
  • Swimming lessons
  • Teeth whitening
  • Weight loss programs for improvement of appearance, general health, or sense of well-being

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