Soon, you’ll be able to shelter even more money from taxes thanks to your HSA. That means you’ll not only pay less in taxes on the money you already have, but you’ll also have the chance to get more tax-free earnings. The IRS recently issued inflation-adjusted numbers for 2014 HSA contribution limits, along with minimum deductibles and maximum out-of-pocket limits.
View the list of all HSA Qualified Expenses that are available for a tax credit.
Higher HSA Contribution Limits
In 2013, you can only contribute up to $3,250 for an individual HSA. Next year, you can deposit up to $3,300. For a family HSA, the maximum contribution is increasing from $6,450 this year to $6,550 next year.
And, there’s no change in the catch-up contributions if you’re at least age 55. You may contribute an additional $1,000 this year and another $1,000 again next year. All money you deposit in an HSA can be permanently sheltered from taxes if you spend it on qualified health care. Click here to see a list of the kinds of health-related costs you can use HSA funds to cover. You may be surprised by things like travel expenses.
HSA Deductibles and Out-of-pocket Limits
In 2014, HSA-qualified policies must have the same minimum deductibles as they do this year. For an individual, that’s $1,250 and for a family, it’s $2,500. That’s the minimum, so certain HSA-qualified policies may have higher limits.
The highest out-of-pocket expenses allowed this year, including the deductible, are $6,250 for individual coverage and $12,500 for family coverage. Next year, that’s increasing to $6,350 for individuals and $12,700 for families. Our instant quotes always show you the maximum out-of-pocket per year under Plan Details since that’s so important to know.
HSA Tax-sheltered Assets Remain Available for Medical Costs
Unlike IRA funds, HSA money can be withdrawn and spent on dental and health care before you reach age 59 ½. Another big difference is that you don’t have to withdraw HSA money at a certain age like you do IRA money. You can leave it invested earning tax-free interest or dividends.
Some Changes I’d Like to See
I’d like to see these contribution limits raised substantially. The more we can encourage people to save for future medical expenses, the stronger our society will be. I also believe that people should be able to pay for their health insurance from their HSA. Currently, people who purchase their own health insurance are penalized in comparison to people who receive insurance from an employer, because the individual must pay taxes on that expense. If an employer provides this as a benefit, it is tax-free.
If any tax breaks are to be given for purchasing health insurance, it is individuals who should be favored, not corporations. People who spend their own money, on health insurance or medical expenses, always pay more attention than bureaucrats and politicians spending the taxpayer’s money. And it is greater attention to costs, from the consumer, that can drive down healthcare costs. Understand more about your HSA and how it works here.
So I believe tax policies should promote individual responsibility and decision-making. What do you think?