Good news for those that use their Health Saving Account (HSA) new contribution limits have been raised for 2014 as follows:
- Contribution limits 2013 Individual: $3,250 Family: $6,450
- Contribution limits 2014 Individual: $3,300 Family: $6,550
- Catch-up contributions $1,000 for an account holder age 55 or older
What is an HSA? It simply stands for Health Savings Account. It is a tax advantaged medical savings account for United States tax payers who are enrolled in a high deductible health plan (HDHP). Traditional health plans have lower deductibles than HSA’s. Optical services and optical correction products qualify. The funds contributed to the account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), funds roll over and accumulate year over year if not spent. HSAs are owned by the individual, which differentiates them from the company-owned Health Reimbursement Arrangement (HRA) that is an alternate tax-deductible source of funds paired with HDHPs. Funds may be used to pay for qualified medical expenses at any time without federal tax liability.
Because HSA’s are individual owned rather than company owned, many self employed people or those without company health coverage are best served by this type of account. I picked this because I was able to lower my monthly premium and it offered a tax saving. Why are HSA’s good for Optical? Optical services and products are qualified medical expenses provided they are for optical correction. Many optical patients may not be aware of this so it is good idea to ask if a patient has an HSA account if they do not have company provided insurance. They may not know that they can use their HAS account for Optical products and services.