Sorry about your personal loss. The inheritance isn’t taxable, but receiving funds from the annuity is because your cousin never paid tax on this income. Sounds confusing, but it’s the same thing when inheriting an IRA—receiving the inheritance isn’t taxable but when distributions from the account are taken, the distributions become taxable. Unlike property that gets a stepped-up basis when the owner dies so that appreciation is never taxed, there is no similar rule for ordinary income; it remains taxable to heirs and beneficiaries.
For 2007, a high deductible health plan is a health plan with an annual deductible that is not less than $1,100 for self-only coverage or $2,200 for family coverage, and with annual out-of-pocket expenses that do not exceed $5,600 or $11,200, respectively.