Health Savings Accounts for 2014

Health savings accounts (HSAs) are a viable way to obtain affordable health coverage. In order to make contributions to these accounts, you must be covered by a high-deductible health plan (HDHP). The IRS recently issued 2014 dollar amounts for HDHPs and contribution limits for HSAs.

Definition of HDHPs

For 2014, an HDHP is a health plan with an annual deductible of not less than $1,250 for self-only (individual) coverage, or $2,500 for family coverage. The cap on annual out-of-pocket expenses to pay insurance deductibles, copayments, and other amounts (other than premiums) is $6,350 for self-only coverage and $12,700 for family coverage.

Contribution limits

If you have self-only coverage, you can contribute on a tax-deductible basis up to $3,300 for 2014. The limit for those with family coverage is $6,550. Those who are at least 55 years old at the end of the year can add another $1,000.

Final word

HSAs cannot be used by those who are 65 or older and eligible for Medicare. Those who do not have Medicare, employer-sponsored coverage, or another insurance plan and are considering HSAs for next year should compare them with coverage that may be obtained through government exchanges. Details on the exchanges are not yet available; enrollment in the exchanges for 2014 is set to begin on October 1, 2013.