Press Room

October 28, 2005

Indexed Amounts for Health Savings Accounts

The Treasury Department and IRS today issued new guidance on the maximum contribution levels for Health Savings Accounts (HSAs) and out-of-pocket spending limits for high deductible Health Plans (HDHPs) that must be used in conjunction with HSAs.  These amounts have been indexed for cost-of-living adjustments for 2006 and are included in Revenue Procedure 200r-70, which announces changes in several indexed amounts for purposes of the federal income tax.

The new levels are as follows:

New Annual Contribution Levels for HSAs:

  • For 2006, the maximum annual HSA contribution for an eligible individual with self-only coverage is $2,700.  (Note: for any individual, the maximum contribution is the lesser of the indexed amount or the deductible of the HDHP.)
  • For family coverage the maximum HSA contribution is $5,450.
  • Catch up contribution for individual who are 55 or older is increased by statute to $700 for 2006.
  • Both the HSA contribution and catch up contribution apply pro rate based on the number of months of the year a taxpayer is an eligible individual.

New Amounts for Out-of-Pocket Spending on HSA-Compatible HDHPs:

  • The maximum annual out-of-pocket amounts for HDHP self-coverage increase to $5,250 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $10,500.

Minimum Deductible Amounts for HSA-Compatible HDHPs:

  • For 2006, the minimum deductible for HDHPs increases to $1,050 for self-only coverage and $2,100 for family coverage.

Note that a fiscal year HDHP that satisfies the requirements for an HSA-compatible HDHP on the first day of its fiscal year may apply that deductible for the entire fiscal year.