February 2, 2016
For those with a health savings account (HSA) combined with a qualifying high-deductible health plan it helps to be aware of the changes that went into effect Jan. 1, 2016.
What’s changing with with your health savings account
The maximum contribution for 2016 is $3,350 for individuals and $6,750 for families. This is slightly more than 2015. However, anyone can contribute to their HSA, including family members and employers. Contributions for the 2015 tax year can be made through April 15, 2016 or the date the account holder files her/his taxes.
Oh, and if you’re 55+ you can add $1,000 to that contribution.
As of 2011, HSA funds cannot be used to purchase over-the-counter medicines unless specifically prescribed by a doctor. This will prevent funds from being used for items such as pain relievers and bandages.
Also, the penalty for using HSA funds for non-qualified medical expenses for those under the age of 65 (unless totally and permanently disabled) increased from 10 percent to 20 percent of the funds used for non-qualified expenses. Funds spent for non-qualified purposes also are subject to income tax.
Because of the available tax credit, Health Savings Account health plans help in reducing the net annual cost for health insurance!
Increased penalty on a health savings account
Funds may be withdrawn from an HSA for purposes other than qualified medical expenses, but the account holder will face both income taxes and a 20 percent penalty. Unused HSA funds carry over from year to year.