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Health Savings Accounts (HSA) – A Fantastic Tax Planning Tool


Health Savings Accounts (HSA) – A Fantastic Tax Planning Tool – first introduced in 2003 via IRC § 223(b)(2)(A)were legislatively intended forindividuals covered by high-deductible health plans to generally allow for preferential income tax treatmenton money saved for medical expenses.

Many more US Taxpayers are taking advantage of Health Savings Accounts as a fantastic tax planning tool. If this applies to you, review the following resources to determine if you qualify and how to report:

Generally any adult without “first dollar coverage” ANDa high-deductible health plan qualifies foran HSA.

Albeit NOT consider “substantial authority” the above links are resources to help you generally understand among other items the following subtopics:

  1. qualified medical expenses,
  2. qualified contributions,
  3. distributions,
  4. death of an account holder,
  5. forms required

The most salient 2021 tax reporting points to glean from this post are:

  • the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,600 ($4,600 if over 55 y.0.).
  • the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,200 ($8,200 if over 55 y.o.).
  • a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage
  • annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,000 for self-only coverage or $14,000 for family coverage.

Special Notes

For more of a drill down on Health Savings Accounts (HSA) – A Fantastic Tax Planning Tool – contact me today

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