Remember that you have until April 15 this year to make your 2012 HSA contribution, and there are half a dozen reasons why that can help your bottom line.
Limits on Itemized Medical Expense Deductions
Until 2013, people without an HSA could deduct their medical expenses that exceeded 7.5 percent of their income by itemizing deductions. This limit has now been raised to 10 percent. That makes it even smarter to invest in an HSA – and invest to the full extent allowed by the IRS.
Flexible Spending Account (FSA) limits
An FSA was not as good as an HSA because HSA funds roll over from year to year. FSA funds expire annually. That being said, FSA funds took another hit. Last year, there was no legal limit on FSA deposits, but a lot of employers didn’t go over $5,000. FSA contributions are limited to $2,500, in 2013. I expect small business owners to move to Health Reimbursement Arrangements now to help employees get individual health insurance plans. And, HRAs work with an HSA.
Medical Device Tax
The 2.3 percent tax on gross sales could drive up prices on things like hip replacements, knee replacements, pacemakers, etc.
Surtax on Investment Income
The highest marginal tax rate is now up to 43.4 percent for individuals with more than $200,000 and for couples with above $250,000. There are also new taxes on dividends, capital gains and other kinds of investment income.
Higher Payroll Tax
Last year, the payroll tax for Medicare was 2.9 percent for wages and profits from self-employment. Now, it’s 3.8 percent on wages or profits above $200,000 for individuals ($250,000 for couples).
True, not all of these will probably hit you at once, but you’re probably going to end up paying more for some of these increases. The more you contribute to your HSA for 2012 and 2013, the less money you’ll be losing. And, in an unpredictable future, savings can be even more important.
From agent to V.P. of Business Development, Fred Adams has filled most every role imaginable during 21 years working with health insurance. When Congress passed the 2003 law on health savings accounts, Fred was dubbed “The HSA Expert” by press and a growing, fanatical client base.