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Archive for Items Categorized 'Health Savings Accounts'

IRS Announces 2014 HSA and HDHP Limits

Rainy Day FundThe Internal Revenue Service (IRS) has announced the 2014 contribution limits, deductible minimums and out-of-pocket maximums for health savings accounts (HSAs) and high-deductible health plans (HDHPs).

  • An HDHP must have a deductible of at least $1,250 for individual coverage and at least $2,500 for family coverage (including a minimum $2,500 embedded individual deductible under family coverage) to qualify an individual to contribute to an HSA. These minimum deductibles are unchanged from 2013.
  • Out-of-pocket maximums for an HSA-qualifying HDHP in 2014 are $6,350 for individual coverage and $12,700 for family coverage. These are increased from $6,250 for individual coverage and $12,500 for family coverage in 2013.
  • Contribution limits for HSAs will be $3,300 for individual coverage and $6,550 for family coverage in 2014. These are increased from 2013’s limits of $3,250 for individual coverage and $6,450 for family coverage. The annual “catch-up” contribution amount for individuals age 55 or older will remain $1,000.

Are HSAs the New 401(k) Plans?


As health savings account account balances grow and become sizable assets for employees, they become a powerful – and increasingly necessary – financial planning tool.

For example, a 65-year-old married couple who retired in 2011 with median prescription drug expenses would need $287,000 to have a 90% chance of covering all medical costs after retirement, according to an Employee Benefit Research Institute study.

Retirement expert Kimberly Sexton believes an employee can fund that number by saving via a health savings account.

By saving $5,000 a year in an HSA at a modest 5% rate of return for 25 years before retiring, an employee will have more than the recommended $250,000 to cover retirement medical expenses.

“Health savings account contributions go in tax-free, grow tax-free and come out tax-free,” Sexton explained to benefits managers at EBN’s 2012 Benefits Forum & Expo.

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