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                Tax Advantages

Funds deposited  into your HSA account can reduce your taxable income by the amount you contribute.  This is a post tax "above-the-line" deduction. 

You can also make contributions to your HSA on a pre-tax basis if your employer offers a Section 125 Cafeteria Plan.  The deduction is taken out of your paycheck, prior to taxes being applied, and deposited into your HSA account.  

2015 IRS Contribution Limits Single Plan Family Plan
Minimum Deductible $1,300 $2,600 (The IRS sets annual requirements for the minimum deductible and maximum
 out-of-pocket expense for HSA compatible health plans.)
Maximum Out-of-Pocket $6,450 $12,900
Contribution Limit $3,350 $6,650  
Catch-up Contribution (55 or older) $1,000 $1,000 (Individuals age 55 or over can make catch-up contributions)
2016 IRS Contribution Limits Single Plan Family Plan
Minimum Deductible $1,300 $2,600 (The IRS sets annual requirements for the minimum deductible and maximum
 out-of-pocket expense for HSA compatible health plans.)
Maximum Out-of-Pocket $6,550 $13,100
Maximum Contribution Limit $3,350 $6,750  
Catch-up Contribution (55 or older) $1,000 $1,000 (Individuals age 55 or over can make catch-up contributions)

The interest on HSA funds grows on a tax-deferred basis and is not considered taxable income when the funds are used for eligible medical expenses.  (The only time you pay taxes or penalties on your HSA funds is if you make a non-eligible purchase or if you contribute more than the yearly maximum contribution limit - however, both misuses can be corrected free of tax penalties by April 15th of the following calendar year.)  

 Eligible medical expenses (such as prescriptions, dental or vision care) can be purchased tax-free when you use your HSA.

 



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