Ohio Health Insurance Options

Ohio Health Insurance Options
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HSA Contribution Limits Increase


Good News for You!

New federal government rules that went into effect on January 1, 2007, will make Health Savings Accounts more flexible for single and families with individual HDHP/HSA or starting an HDHP/HSA. The Federal Government has added new funding options and changed the method of determining the maximum annual contribution limits.

*The maximum allowable contribution into your savings account is no longer based on the lesser of your High Deductible Health Plan (HDHP) Deductible amount or the IRS limit for your single or family coverage. Which means the maximum contribution that can be made for single coverage plans is $2,850 (next year, 2008, it goes up to $2,900) regardless of what your deductible amount is. For all individuals with family coverage, the maximum contribution is now $5,650 (next year, 2008, it will increase to $5,900).

* The new rules will allow a one-time rollover from a Traditional or Roth IRA to an HSA to provide immediate access to funds to cover qualified medical expenses.

*Contributions will no longer be prorated depending on the month you start your qualified High Deductible Health Plan (HDHP), which means that if you start your HDHP/HSA in July you will be able to contribute the full amount into your HSA, (Single coverage, $2850, or Family coverage, $5650) for 2007. Note: Individuals who enroll midyear must continue to be covered by a High Deductible Health Plan for at least 12 months after the end of the calendar year. If you do not continue to be covered for the 12 months after the calendar year, you will be subject to income tax and a 10% excise tax on HSA contributions for the months not covered by an HDHP.

Example:

Bob enrolls his family in a HDHP on July 1, 2007, with a $3000 deductible. Bob can contribute the maximum annual contribution allowed for family coverage, which is $5650. Bob has several options on how he can fund his HSA. He can do a one time rollover from his Roth IRA or Traditional IRA. Another option would be to fund it out of his personal savings account. However, if Bob contributes the full amount ($5650) and fails to keep his HDHP for the remainder of the 2007 calendar year and for the following year (Jan.1, 2008, through Dec. 31, 2008), he will be subject to taxes for the months he is not covered by an High Deductible Health Plan.

If you have questions or would like to enroll, contact an Ohio Insurance Options agent at 1-888-217-4172.

Copyright 2007 Ohio Health Insurance Options

By Mark A Dunn
Ohio Health Insurance Options
www.ohioinsuranceoptions.com