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HSA Comparability Rules & Contributions

HSA stands for health savings account, which is a special type of savings account that comes with a high-deductible health insurance plan. An HSA holds money you can use to pay for health and medical expenses that are not covered by your health insurance policy. Understanding comparability rules, contribution amounts and limitations allow you to maximize the tax benefits and money-saving options these types of accounts offer. The majority of these rules became effective in the 2008 tax year and continue to be in effect in 2010.

  1. Employer Comparable Contributions

    • According to the Internal Revenue Service (IRS), an employer can make contributions to the health savings accounts of each of its employees. This is in addition to the contribution amount that the individual employee decides to contribute. In order for the contributions to be comparable, the employer either has to make the same contribution amount to each employee account or contribute the same percentage to each employee account.

    Comparable Participating Employees

    • Employers are required to provide a written memo or notification to employees about the health savings account to each employee. The notification must state that the employer makes contributions to employee HSAs. The memo must also state the terms of the contributions, such as how much the employee contribution will be, either in a dollar amount or as a percentage. The written notice must be given to all employees who qualify for the health savings account, whether they choose to open an HSA or not. Notification must be made by January 15 of the following calendar year, according to the IRS.

    Contribution Amount Limitations

    • When you have a health savings account, there are limitations on how much you can contribute per year. Maximum contribution amounts are set for each calendar year and are subject to change from year to year. For the 2010 tax year, an individual can contribute up to $3,050, while a health savings account for a family health insurance plan has a maximum contribution amount of $6,150.

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