Health Savings Accounts
A Health Savings Account (HSA) is a tax-exempt trust or custodial account that you can establish with a qualified HSA trustee that can be used to pay for or reimburse yourself for medical, dental and vision expenses that you incur.
The benefits of an HSA include the following:
- You can claim a tax deduction for contributions made to your HSA.
- Contributions to your HSA made by your employee may be excluded from your gross income.
- Contributions remain in your account from year to year until you use them.
- Interest or other earnings on the assets in your HSA are tax free.
Some of the rules that apply to Health Savings Accounts include:
- In order to participate in an HSA you must be a participant in a high-deductible health plan (HDHP).
- A HDHP, at a minimum, must provide for a deductible of at least $1,300 for single individuals and $2,600 for participants with one or more covered dependents.
- The limit that you can contribute to an HSA for 2016 is $3,350 for single individuals and $6,750 for individuals with coverage that includes one or more covered dependents.
For other rules please click here: www.irs.gov/publications/p969/index.html to view IRS Publication 969.