Compliance November 19, 2004

Feds Put Out '05 HSA HDHP Limits

November 19, 2004 (PLANSPONSOR.com) - Federal officials on Friday released the 2005 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.
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>A news release from the US Treasury Department and the Internal Revenue Service (IRS) said the amounts have been indexed for cost-of-living adjustments for 2005. The minimum deductible required for HDHPs did not change. The new figures are included in Revenue Procedure 2004-71, which announces changes in several indexed amounts for purposes of the federal income tax.

“Today’s guidance will help consumers and employers who wish to   participate in HSAs in 2005 to plan accordingly,” said Treasury’s Acting Assistant Secretary for Tax Policy Greg Jenner, in the announcement   “Knowing the   dollar limits for these accounts, and for the high deductible insurance that goes with them, is critical for those who want to get the maximum benefit out of this revolutionary health care coverage   option – one that puts health care spending decisions back in the hands of individuals.”

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According to the announcement, the new contribution levels are:

  • For 2005, the maximum annual HSA contribution for an eligible individual with self-only coverage is $2,650. For any individual, the maximum contribution is the lesser of the indexed amount or the deductible of the HDHP.
  • For family coverage the maximum annual HSA contribution is $5,250.Catch-up contributions for individuals who are 55 or older is increased by statute from $500 to $600 for 2005.
  • Both the HSA contribution and catch-up contribution apply pro rata based on the number of the months of the year a taxpayer is an eligible individual, and, with respect to the catch-up contribution, the number of months of the year that the taxpayer is age 55 and over.
  • The maximum annual out-of-pocket amount for HDHP self-coverage increases to $5,100 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $10,200.
  • For 2005, the minimum deductible for HDHP is unchanged, remaining at $1,000 for self-only coverage and $2,000 for family coverage.

        

The new limits are at  http://www.treas.gov/press/releases/reports/111904revproc200471.pdf .

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