Health Savings Accounts are available for individuals who have high-deductible health plans. In 2015, a plan for an unmarried person is considered high deductible if it has an annual deductible of at least $1,300 and the annual out-of-pocket expenses (deductibles, co-payments and other expenses) that the insured must pay for covered benefits cannot exceed $6,450.
The unmarried person can contribute up to $3350 each year and an additional $1000 if he is over age 55.
For Family plans, the minimum deductible is $2600, annual out-of-pocket expenses $12,900 and contribution limit $6650 with an additional $1000 if contributor is over age 55.
Unlike Flexible Savings Accounts, Health Savings Account holders can carry over balances from year to year until the account holder’s death, and if planned properly, until the account holder’s spouse’s death.
All contributions to, distributions from and income earned in the account are free from federal income tax as long as the assets are used to pay for qualified medical expenses. Depending on the amount contributed and distributed from the account and how long the account has been established, Health Savings Account balances have the potential to be substantial.
For information about Heath Savings Accounts and how they can be incorporated in your Estate Plan, contact a law firm that concentrates in Estate Planning.