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Guest Article

Deloitte logo

(From the May 19, 2008 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

IRS Issues Inflation-Adjusted HSA Limits for 2009

The Health Opportunity and Patient Empowerment (HOPE) Act of 2006 included a number of provisions to enhance health savings accounts (HSAs). Perhaps the least-publicized of these provisions requires the IRS to publish inflation-adjusted HSA limits by June 1 of each year. The IRS issued Revenue Procedure 2008-29 on May 13, 2008 to provide the adjusted limits for the 2009 taxable year, in plenty of time to satisfy the new mandate and to give employers and individuals a chance to plan for 2009. The limits for 2008 and 2009 are summarized and compared in the following chart.

HSA Inflation-Adjusted Limits

Single Coverage Family Coverage
Annual Contribution Limit 2008 $2,900 $5,800
2009 $3,000 $5,950
Annual Catch-up
Contribution Limit*
2008 $900 $900
2009 $1,000 $1,000
HDHP -- Minimum
2008 $1,100 $2,200
2009 $1,150 $2,300
HDHP -- Maximum Annual
2008 $5,600 $11,200
2009 $5,800 $11,600

*Only eligible individuals who are 55 years old or older as of the close of the taxable year can make catch-up contributions. The catch-up contribution limit is set by statute, and is not adjusted for inflation.

Prior to 2007, the annual HSA contribution limit was the lesser of the eligible individual's highdeductible health plan (HDHP) deductible or the inflation-adjusted statutory limit. However, the HOPE Act removed the HDHP deductible from the contribution limit equation effective for 2007 and later tax years. Thus, in 2009 all eligible individuals can contribute up to $3,000 ($2,900 in 2008) to their HSAs if they have single coverage, and $5,950 ($5,800 in 2008) if they have family coverage, regardless of their HDHP deductible amounts.

Other HSA Changes

The HOPE Act also made the following other changes to the HSA rules:

  • Permit employers to make larger contributions to the HSAs of non-highly compensated employees than to the HSAs of highly compensated employees without violating the employer comparable contribution requirement;
  • Allow employees to complete a one-time rollover from their health flexible spending arrangements (FSAs) or health reimbursement arrangements (HRAs) to their HSAs;
  • Permit individuals to contribute the maximum annual amount to HSAs so long as they are eligible individuals during the last month of the taxable year; and
  • Permit individuals to complete a one-time rollover from their individual retirement accounts (IRAs) to their HSAs.

Deloitte logoThe information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Tom Veal 312.946.2595, Deborah Walker 202.879.4955.

Copyright 2008, Deloitte.

BenefitsLink is an independent national employee benefits information provider, not formally affiliated with the firms and companies who kindly provide much of the content and advertisements published on this Web site, including the article shown above.
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