IRS Raises Limits for HSAs and HDHPs for 2013

In IRS Revenue Procedure 2012-26, the IRS has announced the new inflation-adjusted increases for Health Savings Account (HSA) contributions and high-deductible health plan (HDHP) deductibles.
 
To qualify for an HSA, you must have a high deductible health insurance plan and no other health insurance. Linda Wallace, CPA, CEBS, senior manager at Carmel, IN-based CPA firm Blue & Co., points out that, "Once you go on Medicare, you can't continue to fund your HSA," however, the HSA can be regarded as a long-term tax-free investment to be used to cover future medical expenses.
 
The contributions to an HSA are tax deductible, as an above-the-line deduction, in the year in which they are made. Withdrawals are tax free as long as they are used for qualified medical expenses.
 

Talking points
Linda Wallace, CPA, CEBS, senior manager at Blue and Co., CPAs, in Carmel, Indiana, makes these points about Health Savings Accounts:
  • HSA funds are accumulated tax free.
  • Withdrawals are tax free when used for current, qualified medical expense reimbursements.
  • Clients who choose not to use HSA funds currently can use the HSA as an investment for the future.
  • Withdrawals from an HSA can be made at any time; the account holder needs to retain receipts for the expenses.
  • Medicare recipients are not eligible to make contributions to an HSA but they are still able to draw on the account to reimburse for qualified medical expenses.
  • Companies considering setting up HSAs for their employees consider the expenses that will be charged by the HSA custodian.
These amounts apply to the 2013 calendar year.
 
  • The maximum annual contribution to a self-only HSA for HDHP coverage increases from $3,100 to $3,250 for 2013.
  • The maximum annual contribution to a family HSA for HDHP coverage increases from $6,250 to $6.450 for 2013.
  • The age 55 and over annual catch up contribution remains at a $1,000 for 2013.
  • The minimum self-only HDHP deductible increases from $1,200 to $1,250 for 2013.
  • The minimum family HDHP deductible increase from $2,400 to $2,500 for 2013.
  • The maximum self-only HDHP out-of-pocket expense amount (which includes deductibles and co-payments as well as other expenses) increases from $6,050 to $6,250 for 2013.
  • The maximum family HDHP out-of-pocket expense amount (which includes deductibles and co-payments as well as other expenses) increases from $12,100 to $12,500 for 2013.
 
 

You may like these other stories...

The following list highlights 10 apps that that may be of interest to you, your clients, or your clients' clients. They were featured during a session of AWEBLive!, the 12-hour CPE marathon, and presented by Gregory L....
With tax season in the past, it's time to think about the tax implications of decisions your clients may be making about their homes in 2014. The rules are complicated and because of the huge amounts involved, the...
The Financial Accounting Standards Board (FASB) had hoped to issue a final standard on revenue recognition during the first quarter of this year. However, the standard-setting organization confirmed today that the timetable...

Upcoming CPE Webinars

Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.
May 1
This material focuses on the principles of accounting for non-profit organizations’ expenses. It will include discussions of functional expense categories, accounting for functional expenses and allocations of joint costs.