J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

41.10 Health Savings Account (HSA) Basics

Health savings accounts (HSAs) can be used by individuals covered by a high-deductible health plan (HDHP) to save for health-care costs on a tax-free basis in an IRA-like account. HSAs are intended to supplant Archer MSAs; see the discussion of Archer MSA rules later in this Chapter (41.13).

The HSA provides a tax-sheltered account for paying routine medical expenses that fall below the deductible set by the HDHP. To contribute to an HSA, you must not be enrolled in Medicare Part A or Part B and you must not be a dependent of another taxpayer.

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Planning Reminder

HSA limits for 2013

For 2013, an HDHP must have a minimum deductible of $1,250 for self-only coverage, and $2,500 for family coverage. The annual contribution limit for 2013 is $3,250 for self-only coverage and $6,450 for family coverage.

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A qualifying HDHP must have a minimum annual deductible and a maximum annual limit on out-of-pocket costs (see below). For 2012, the minimum annual HDHP deductible is $1,200 for self-only coverage and $2,400 for family coverage. The limit on out-of-pocket costs for 2012 is $6,050 for self-only coverage and $12,100 for family coverage. The limit applies to co-payments, deductibles, and other payments but not premiums.

Generally, contributions to an HSA are not allowed if the taxpayer has coverage under ...