The new contribution limits to health savings accounts (HSAs) for 2019 have been announced. The changes are small; an extra fifty dollars for self-only contributions (up to $3,500) and one hundred dollars for family contributions (up to $7,000).
In related news, the deductible amounts and out-of-pocket expense limits for High-Deductible Health Plans (HDHPs) were also announced. The minimum annual deductibles have not changed; they remain $1,350 for self-only coverage and $2,700 for families. The annual out-of-pocket maximums have increased slightly, by one hundred dollars for self-only (to $6,750) and two hundred dollars for families (to $13,500).
For those unfamiliar with how HSAs work, it’s fairly simple. A health savings account allows you to store money each year, up to the contribution limit, which is not subject to federal income tax. That money must be used for health care; however, since it’s unaffected by federal income tax, you have an extra ten or twenty or thirty percent relative to if it came as part of your normal paycheck.
To qualify, you must be part of an HDHP, which is designed to offer low-cost health insurance with some protection against catastrophic medical bills. The HSA helps you use your money more effectively for health services, and if you don’t use all of your contribution in a given year, it rolls over year after year. If you decide you have more in the account than you’re likely to need, you can simply reduce your contributions; you won’t lose anything in the account unless you withdraw it for non-medical expenses.
If you’d like to learn more about health savings accounts and high-deductible health plans straight from the tax mavens at the IRS, you can find information on the IRS website. And if you’re a small business looking for financial coaching and other tax advice, especially in the Phoenix area, contact us to find out what we can do for you today.
Tax Tips for the Self-Employed – Foster Financial
Analyzing the Cost vs. Benefits of Business Expenses
Strategies for Optimizing Your Investments