IRS Issues 2010 Health Savings Accounts Limits

The Internal Revenue Service (IRS) on May 14 issued Revenue Procedure 2009-29 providing inflation-adjusted limits for health savings accounts (HSAs) for use in 2010.

The annual contribution limits have been increased to:

• $3,050 for those with self-only coverage (up $50 from 2009)
• $6,150 for those with family coverage (up $200 from 2009)

As in previous years, you must be covered under a High Deductible Health Plan (HDHP) to qualify to make an HSA contribution. The limits defining what qualifies as an HDHP have also been increased for 2010:

• Self-only coverage must have a deductible of at least $1,200 (up $50 from 2009)
• Family coverage must have a deductible of at least $2,400 (up $100 from 2009)

These updates for 2010 will allow you to shelter even more of your investment dollars from taxes since any contribution to an HSA counts as a full deduction at the end of the year in addition to the ability to pay for nearly any medical expense with tax-free distributions from the account.