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.
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 any health plan that does not meet the “high deductible” requirement of an HDHP, but there are exceptions. A plan that otherwise satisfies HDHP rules may provide preventive care benefits without a deductible or with a deductible below the minimum annual deductible. Benefits may also be provided under certain types of “permitted” coverage and insurance before the deductible of the HDHP is satisfied. Permitted coverage includes coverage for vision, dental or long-term care, accidents, and disability. Permitted insurance includes per diem insurance while hospitalized, insurance for a specific disease or illness (such as cancer, diabetes, asthma, or heart failure), and insurance relating to workers’ compensation liability, tort liability, or liabilities relating to owning or using a car or other property.
3.143.17.27