Contribution levels set for 2006 HSAs

On October 28, 2005, the Treasury Department and IRS issued maximum contribution levels for Health Savings Accounts (HSAs) and out-of-pocket spending limits for High Deductible Health Plans (HDHPs). These indexed amounts are for use with HSAs in 2006.

The new levels are as follows:

Annual Contribution Levels:

• The maximum HSA contribution for an eligible individual with self-only coverage is $2,700. (Note: for any individual, the maximum contribution is the lesser of the indexed amount or the deductible of the HDHP.
• The maximum annual HSA contribution for family coverage is $5,450.
• Catch up contributions for individuals age 55 and older is increased from $600 to $700.

Both the HSA and the catch up contribution apply pro-rata based on the number of the months of the year a taxpayer is an eligible individual and with respect to the catch up contribution, the number of months of the year that the taxpayer is age 55 and over.

Amounts for Out-of-Pocket Spending on compatible HDHPs:

• The maximum annual out-of-pocket amount for HDHP self-coverage increases to $5,250 and the maximum annual out-of-pocket amount for HDHP family coverage is twice that, $10,500.

Minimum Deductible Amounts for compatible HDHPs:

• The minimum deductible for HDHP has increased from $1,000 for self-only coverage to $1,050 and from $2,000 for family coverage to $2,100.

In an attempt to lower the cost of health care plans Congress created HSAs. These plans rely on encouraging participants to become cost conscious consumers of health care benefits by converting insurance paid first dollar benefits to visible charges paid from each participating employee’s HSA. Participants retain unused amounts in the HSA account, which may be rolled forward without tax to cover payment for services in proceeding years.

Infinisource offers an innovative HSA solution in partnership with Alliance Benefit Group. The key aspect is the market driven interest earnings on accounts along with the high level of plan design flexibility for employers. These HSAs will be used with The Charles Schwab Trust Company as custodian for the pre-tax account contributions and allow employers to pair it with any qualifying high deductible health plan. The SmartFlex™ debit card is another added feature of the Infinisource HSA, which offers participants instant access to funds at the point of purchase.

For more information, please visit the Infinisource web site at www.benefitsolved.com, call 800-779-6384 or email solutions@infinisource.net.

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