Thursday, January 6, 2011

Health Savings Account Contribution Limits Left Unchanged For 2011

Each year the US Internal Revenue Service issues a revision of the Health Savings Account Contribution Limits. This year under IRS Procedure 2010-22 these limits were left unchanged from 2010 due to the fact that cost of living increases remained in-check the previous year. This was most due to the severe economic downturn and credit crunch which caused dis-inflationary pressures to reverberate throughout the U.S. Economy.

Under the 2011 new federal guidelines the maximum contribution that can be made next year by a single individual remains at $3,050 and the limit for a family remains unchanged at $6,150. This means that a family can contribute a maximum of $512.50 per month to their HSA Account and it would be $254.16 for an individual.

Since an HSA account requires the participant to own a High Deductible Health Plan they also set the minimum required deductibles and maximum out of pocket expenses for these plans on an annual basis. The minimum deductible for a single person remains at $1,200 and $2,400 for the family deductible. The maximum out of pocket expenses that a single participant may incur remain at $5,950 and it also remains constant for a family at $11,900. This Maximum includes all deductibles as well as co-pays.

One change that is coming in 2011 is the elimination of Over-The-Counter drugs as an eligible expense item using your HSA. At a time when the government is actively moving to provide health care for everyone, it seems like an odd time to be taking away benefits from those who are being fiscally prudent and using Health Savings Accounts. As of January 2010, there were about 10 million Americans who had chosen a high deductible health plan -HDHP that must be used in conjunction with a Health Savings Account. This is up nearly 1/4 over the previous years numbers showing that citizens want more control over their health care costs.

As the U.S. economy recovers and the fed re-establishes a normal rate of inflation it is likely that we will return to the normal annual increases in Health Savings Account Contribution Limits as we have seen in the past. Hopefully the trend toward HSA Accounts will remain intact and we can stop the severe inflation that has been occurring in health insurance premiums.