2009 HSA Limits Announced

The IRS announced the maximum contribution levels for health savings accounts (HSAs) and out-of-pocket spending limits for high deductible health plans (HDHPs) used in conjunction with HSAs.

Annual contribution levels

For 2009, the maximum annual HSA contribution for an eligible individual is $3,000 and $5,950 for family coverage.

Out-of-pocket spending

The maximum annual out-of-pocket amount for HDHP self-coverage increases to $5,800 and $11,600 for family coverage.

Minimum deductible amounts

For 2009, the minimum deductible for an HDHP increases to $1,150 for self-only coverage and $2,300 for family coverage.

HSAs can make Health Insurance affordable

According to the Wall Street Journal, health insurance costs rose 36 percent between 2000 and 2004 while wages rose just 12.4 percent. In addition, the number of Americans spending more than 25% of their income on medical costs climbed from 11.6 million in 2000 to 14.3 million in 2004, according to the journal.

One product that is helping to make family health insurance more affordable is the health savings accounts (HSA). Individuals can make contributions to health savings accounts tax-free. The money may then be used tax-free to pay for qualified medical expenses. If you don't use all the money in your HSA in any given year, it can be rolled over to the next year.

Health Savings Accounts save money

If you were to spend every penny on health insurance out of your pocket, two things would happen. First, you'd be more interested in your medical treatment, questioning the cost and necessity for every procedure. And, second, you'd take better care of yourself, knowing that being overweight, or smoking, or not exercising is bound to be very costly to your own financial future, as additional health care is going to hit you in the pocketbook.

Health Savings Accounts let people keep the money they don't spend on medical care -- in an account that grows tax-deferred every year to pay for future medical expenses. And the money they do spend for medical expenses is paid out on a pre-tax basis.

The account is combined with a high-deductible health plan that costs less than traditional health insurance policies, but covers major medical expenses. Employers may use some of that savings to contribute to workers' HSAs.

In 2007, individuals can set aside a tax-deductible contribution to the HSA of up to $2,850, or $5,650 for a family.