HSA Updates and Advanced Guidance

The Internal Revenue Service (IRS) has announced the Health Savings Account (HSA) maximum contribution amounts, and qualified high deductible health plan (QHDHP) deductible and out of pocket limits for 2015.  Since I have provided basic guidance on “all things HSA” in a previous post (see – http://sstevenshealthcare.blogspot.com/2013/10/health-savings-accounts-hsas.html ), I thought I would provide some advanced HSA guidance in this week’s blog, along with the recently announced 2015 IRS maximums.

For 2015, the maximum allowable HSA contributions are:

  • INDIVIDUAL Coverage (self only):  $3,350
  • FAMILY Coverage (self plus 1 or more dependents): $6,650
  • Account holders age 55 and older can continue to make additional, annual catch up contributions of $1,000.
  • Health Savings Account holders receiving an employer contribution to their HSA need  to factor the amount of this contribution into determining their maximum annual contribution amount.

For 2015, the maximum deductible and out of pocket limits associated with the required Qualified High Deductible Health Plan (QHDHP) are:

  • INDIVIDUAL Coverage (self only): Deductible not less than $1,300; out of pocket no greater than $6,450.
  • FAMILY Coverage (self plus 1 or more dependents): Deductible not less than $2,600; out of pocket no greater than $12,900.

To access a copy of the IRS revenue notice detailing this announcement, click – http://www.irs.gov/pub/irs-drop/rp-14-30.pdf

NOTE: The Affordable Care Act’s maximum out of pocket limits for all health insurance plans are based on the annual published HSA maximum amounts.  Therefore, expect non-HSA plan out of pocket limits to increase commensurately in 2015.

Here are some advanced HSA guidance tips pertaining to issues I encounter from time to time:

  1. Catch Up Contributions: If both a husband and wife are age 55 or older, each can make a catch up contribution to their HSA.  However, if the couple has only one account, the spouse who is covered as a dependent on the QHDHP must set up their own HSA in order to make the catch up contribution.
  2. Over the Counter Medications: Over the counter medications (OTC) were removed from the list of qualified HSA reimbursable expenses in 2011, which was required by the ACA.  However, OTC medications are ALLOWED to be reimbursed, tax free, by HSA funds IF the account holder requests and receives a PRESCRIPTION for the OTC drugs from their physician.
  3. Premiums: Certain insurance premiums are allowed to be paid for with HSA funds, and include: Medicare Part B and Part D coverage; COBRA coverage (health, dental, vision); individual health insurance if receiving unemployment benefits; and finally – Long Term Care coverage (up to the IRS’ allowable annual long term care premium deduction amounts, which vary based on age. Click on the following link to access this information: http://www.aaltci.org/news/long-term-care-insurance-association-news/increased-long-term-care-insurance-tax-deduction-limits-announced
  4. Aging Out of HSA Eligibility: Account holders DO NOT lose their eligibility to continue contributing (and receiving employer contributions) to their HSA merely by turning age 65.  Rather, eligibility is forfeited if and when an individual is enrolled in Medicare Part A, which for many, but not all, happens to be upon attainment of age 65.
  5. Partial Year QHDHP Enrollment/Annual HSA Contribution Allowed: The Tax Relief and Health Care Act of 2006 made a number of enhancements and improvements to HSAs.  A little known enhancement is referred to as the “deeming rule”.  This rule allows an individual whose QHDHP becomes effective sometime during the year (e.g. October 1st) to make the maximum allowable annual HSA contribution for that year, provided they remain enrolled in the QHDHP “the remainder of the last month of the year, and the ensuing 12 consecutive months”.  In this situation, the HSA holder is “deemed to have been eligible for the entire year”, despite enrolling in their QHDHP later in the year.