2008 HSA Limits Released

The Treasury Department released the 2008 HSA limits today.  Beginning this year, the inflation-adjustment limits will be released every Spring, not every Fall (as is the case with other tax code provisions).

There is one juicy nugget in there that allows people to sock even more money away without taking on any additional risk.

The overall limits are the following:

Maximum HSA Contribution: $2900 for individual, $5800 for families

Minimum HDHP Deductible: $1100 self-only coverage, $2200 family coverage*

Out of Pocket Maximum: $5600 self-only coverage, $11200 family coverage

Post-55 "Catch-Up" Limit: $900

*This number is unchanged from the prior year.  As a result, plans will not have to be amended to increase their deductibles.  At the same time, higher contributions can be made in 2008.

This means that, for example, an individual might have a plan with an $1100 deductible, and could put away up to $2900 the first year.  That's almost three years' worth of deductibles in one year!

Comments

[Connie Webb]

I believe the contribution is limited to the amount of the deductible. Please check your comment about contributing $2,900 against a $1,100 deductible. I hope you are correct.

[Rich Snyder]

I think the taxpayer is limited to the amount of the plan deductible, up to $2,900. In this case, the limit is $1,100 for single coverage is the maximum amount to be contributed.

[bob]

In 2006, the contributions to an HSA were limited to no more than the deductible in the plan. That seems to have been done away with for 2007 and thereafter:

From IRS Publication 553 (2007) -- Deductible limitation on contributions. The annual deductible limitation for contributions to your HSA based on the amount of your health insurance deductible is repealed. For 2007, the maximum HSA deduction increases to $2,850 ($5,650 for family coverage) regardless of the amount of your health insurance deductible. The maximum additional deduction for individuals age 55 or older increases to $800.

To the editors -- thanks for the prompt 2008 update. Its not on the IRS site yet!!

[Dianne]

Do you mean that for 2007 instead of taking my $1250 deductable plus the $800 catch up I could take $2850 plus the $800 catch up? Please advise
Thanks!

[Scot]

@ Diane.
Yes, you can put in the $2850 plus the $800 catch up for 2007.

[Ann]

In response to Dianne's question, HSA contributions are no longer limited to the deductible in the plan. You can contribute the maximums each year.

[L Tomsheck]

Does the limit include contributions from your company that is deposited into your HSA savings accounts?

[Tori C.]

@ L Tomsheck

The total maximum contribution is a combination of employee and employer contributions. It could also include contributions from your Aunt Martha, if she wanted to contribute to your HSA.

[Andre]

Suppose an owner of an LLC. The business contributes $1000 per year to each employees HSA including his account. Since he is eligible to contribute uo to 2900 in 2008 could he contribute from his personal checking account the remaining $1900 and take a tax deduction. Remember he is the owner of the LLC?

Thanks

[Kristie H]

If an owner is on an HSA policy and his wife is also an employee and has the kids under her, can they each contribute the maximums since they are both paid employees or can they only do 1 family maximum?

[Jacqueline]

My primary health coverage is through my employer, who offers a HDHP with an HSA option. I would like to have my husband's health plan as a secondary coverage - mainly because my surgeon of choice (for reconstructive surgery after mastectomy) has a contract with my husband's insurance, but not with mine. My husband's health plan is not a HDHP. Would this make me ineligible for the HSA?

[M. VENKATARAMAN]

I will be 65 in June and getting Medicare from June. How much maximum I can contribute to my HSA? Its my understanding that I can contribute a maximum of 5 months ($1208) plus a catch up $375. But my HSA coustodian tells me that irespecitve of my getting Medicare from June, I can contribute a maximum of 2900 plus 900. I don't know which is correct. Please clarify this. Thanks.

[M. VENKATARAMAN]

I will be 65 in June and getting Medicare from June. How much maximum I can contribute to my HSA? Its my understanding that I can contribute a maximum of 5 months ($1208) plus a catch up $375. But my HSA coustodian tells me that irespecitve of my getting Medicare from June, I can contribute a maximum of 2900 plus 900. I don't know which is correct. Please clarify this. Thanks.

[Larry Amato]

I am 54 and my wife is 51 this in Jan. 2008. As of January 1, 2008 my wife are on a PPO which is a $2,000 deductible qualified HSA.

We want to fund an HSA account for the $5,800 allowed for the year. Our Bank offers this but limits to Money Market rates only with no other investments. Is this our best avenue to fund?

[K. Finn]

I just opened an HSA on 1/1/08. I turned 55 last September. When can I contribute my "catch up?"

[Steven Vince]

We have 2 accounts. A single one for me (over 55) and a family plan (wife and son) each linked to it's own HD insurance plan. Can the family limit still be met without penalty if the family HSA is active in Jan '08 but the policy is held for less than the full year? My wife is job hunting and may qualify for a less expensive comprehensive policy if she gets it.

[Ralph Boltz]

I turned 55 on December 31, 2007. Can I make the $800 catch up contribution for the year 2007 or must I prorated it for the month of December 2007?

[Georgia]

How do you rectify making a contribution for 2007 in excess of limits, in this case a subscriber not an employer plan error of $200?

[Charlotte]

Is there an AGI limit for deducting HSA contributions? Thanks.

[Deborah]

I have an HSA thru my employer which covers family (wife and spouse). We are both over age 55. Does this mean that for 2007 we can contribute 5,650 + 800 + 800 or a total of 7,250 less whatever amount is contributed by my employer? If so, then for 2008 would maximum be 5,800 + 900 + 900 or a total of 7,600?