The Treasury Department and IRS last week issued new limits for 2006 on the 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. These amounts have been indexed for cost-of-living adjustments for 2006 and are included in Revenue Procedure 2005-70 on pg. 14.
The new levels are as follows:
New Annual Contribution Levels for HSAs:
For 2006, the maximum annual HSA contribution for an eligible individual with self-only coverage is $2,700. (Note: for any individual, the maximum contribution is the lesser of the indexed amount or the deductible of the HDHP.) For family coverage the maximum HSA contribution is $5,450. Catch up contribution for individual who are 55 or older is increased by statute to $700 for 2006. Both the HSA contribution and catch up contribution apply pro rate based on the number of months of the year a taxpayer is an eligible individual.
New Amounts for Out-of-Pocket Spending on HSA-Compatible HDHPs:
The maximum annual out-of-pocket amounts for HDHP self-coverage will increase to $5,250 and the maximum annual out-of-pocket amount for HDHP family coverage is $10,500.
Minimum Deductible Amounts for HSA-Compatible HDHPs:
For 2006, the minimum deductible for HDHPs increases to $1,050 for self-only coverage and $2,100 for family coverage.