What You Need to Know about Health Savings Accounts in 2016

There is very little that is certain in life, but one thing you can count on is tax changes when a new year begins. That’s true for Health Savings Accounts, (HSA), as well. The IRS put out new guidelines for 2016 that you’ll need to know as they will affect how you may want to proceed with HSA going forward.

For those employees that are enrolled in high-deductible health plans, Health Savings Accounts can be very enticing. HSA provide a way to set aside untaxed contributions that can be applied to cover medical expenses while, at the same time, reducing their tax liabilities to the IRS.

Another popular aspect of the HSA program is that unused funds can be rolled over year after year. This differs from Flexible Spending Accounts, (FSA), as FSA have a use it or lose it policy. Meaning if you don’t use all of the money contributed in the fiscal year, you will lose it. In addition, those that take advantage of Health Savings Accounts can earn interest on the unused contributions. This, in turn, actually reduces the cost of health care in the future.

With all the advantages in mind, there have been some changes for 2016. For individuals, the out-of-pocket limits may not exceed $6,550 which is a $100 increase from 2015, and for families the annual out-of-pocket limits has increased $200 to not exceed $13,100. In addition for families, the annual contribution limits increased $100 to $6,750.

While these amounts may not be earth shattering, they will have an affect on your Health Savings Account and should be taken inconsideration when making health care decisions in 2016.