Carter's Benefits

eNewsletter Volume 2, Issue 2 June 2009

 

   by Eddie Carter, Benefit Consultant

 

2010 HSA Contribution Limits Released

Each year, the Treasury Department and Internal Revenue Service determine guidelines for deductible minimums, out-of-pocket maximums, and contribution maximums for high deductible health plans that must be used in conjunction with health savings accounts (HSAs). The chart below shows the changes for 2010

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If you do not have an HSA, or would like additional information on HSA's for yourself or your company, please contact us.

 

Health Savings Account Contribution Limits

IRS Requirements for 2010

 

Single Plan

Family Plan

Minimum Deductible

$1,200

$2,400

Maximum Out-of-Pocket

$5,950

$11,900

Contribution Limit

$3,050

$6,150

Catch-Up Contribution (55 or older)*

$1,000

$1,000

* If a spouse is also 55 or older, a second HSA may be established and a second catch-up contribution of $1,000 may be made to that account if desired.

IRS Requirements for 2009

 

Single Plan

Family Plan

Minimum Deductible

$1,150

$2,300

Maximum Out-of-Pocket

$5,800

$11,600

Contribution Limit

$3,000

$5,950

Catch-Up Contribution (55 or older)*

$1,000

$1,000

* If a spouse is also 55 or older, a second HSA may be established and a second catch-up contribution of $1000 may be made to that account if desired.

IRS Requirements for 2008

 

Single Plan

Family Plan

Minimum Deductible

$1,100

$2,200

Maximum Out-of-Pocket

$5,600

$11,200

Contribution Limit

$2,900

$5,800

Catch-Up Contribution (55 or older)*

$900

$900

* If a spouse is also 55 or older, a second HSA may be established and a second catch-up contribution of $900 may be made to that account if desired.

HSA Exceptions

If an individual does not stay in the HSA-eligible plan 12 months following the last month of the year of the first year of eligibility, the amount which could not have been contributed will be included in income and subject to a 10 percent additional tax.

Example:
You established a qualified health plan in December 2008 and contributed the maximum allowed.  Then in January 2009 you contributed the maximum contribution for that tax year.

Scenario 1:
  You maintained coverage through December 31, 2009.  You are eligible for the maximum contribution for both 2008 and 2009.

Scenario 2:
You ended coverage April 1, 2009.  Eleven-twelfths of the December 2008 contribution must be treated as income, plus a 10% penalty on that amount must be paid.  Nine-twelfths of the funds deposited in January must be taken out of the account as an excess contribution (and treated as income) but no 10% penalty is incurred.

Are contributions prorated by the number of months the health plan is in place?

Pro-rating of contributions occurs when the status of an HSA changes from family to single, or if the HSA qualified health plan is terminated.

Examples:

Coverage Beginning Mid-year
If you have a new HDHP and coverage begins in July, 2008, you will be eligible to contribute the maximum amount as determined by the IRS ($2,900 for individual coverage and $5,800 for family coverage.)

Health Plan Status Change

If you have family coverage beginning January 1, 2008 and switch to single coverage July 1, 2008, you will be eligible to contribute 6/12 of $5,800 plus 6/12 of $2,900 or $4,350.

HSA Qualified health plan terminated

You have a qualified family health plan January 1, 2008 and terminate coverage  April 1, 2008.  You are eligible to contribute  3/12 of $5,800 or $1,450.

Can I roll over unused funds from an FSA or HRA?

Yes, regulations now allow you to roll over unused funds from an FSA or HRA on a one-time basis.  Please talk to your employer or third-party administrator for specific details.  

Can I transfer funds from an IRA to my HSA?

Yes, regulations allow a one-time rollover from an IRA to an HSA, up to the annual HSA contribution maximum.  Prior to transferring funds, please consult your tax advisor to discuss the benefits and tax reporting requirements. 

 



Additional Resources

If you have questions or would like more information on this complex subject, or if you do not currently have someone administering COBRA for you, please give us a call or send us an email.  Our email address is Questions@CartersBenefits.Com
 
Sincerely,
 
Eddie Carter, Benefit Consultant
and Your Benefit Consultant Team at
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