Change in Minimum Deductible Amounts for HSA-Compatible HDHPs for 2006

The Treasury Department has issued new guidance for 2006 on the maximum contribution levels for Health Savings Accounts (HSAs) as well as minimum deductibles and out-of-pocket spending limits for HSA-Compatible High Deductible Health Plans.

Lake Geneva, WI (PRWEB) October 31, 2005

The Treasury Department has issued new guidance for 2006 on the maximum contribution levels for Health Savings Accounts (HSAs) as well as minimum deductibles and out-of-pocket spending limits for HSA-Compatible High Deductible Health Plans. Treasury’s guidance confirms the numbers published in early September by Dan Perrin of HSA Insider.

HSA Trustee Services, a nationwide leader in origination of Health Savings Accounts/HSAs, would like to call attention to the “New Minimum Deductible Amounts for 2006”. For the first two years (2004-2005) of the Health Savings Account /HSA program, minimum deductible for High Deductible Health Plans/HDHPs was $1,000 for self-only coverage and $2,000 for family coverage. For 2006 the Treasury has now raised the HDHP deductible amounts for 2006: the minimum deductible for HDHPs increases to $1,050 for self-only coverage and $2,100 for family coverage.

With “open enrollment season” going on across the country, we strongly recommend that your check to make sure your new HDHP meets the new minimum deductible for 2006. A number of individuals and employers start out with the minimum HDHP to see how the HSA works. If you are considering moving to a high deductible plan so you can set up an HSA, you must be aware of this change because, ultimately, the responsibility of proving you qualify for an HSA is on your shoulders in case of an audit. Take some time to make sure you have the right minimum HDHP policies because of this ruling, so buyers beware.

High Deductible Health Plans/HDHP are "grandfathered" until the current contract ends. The new minimum deductible applies to contracts beginning in 2006. So if a plan contract starts 12/1/05, the $1,000 minimum deductible still applies. When the contract renews next year, the new $1,050 minimum deductible applies.

So if you are renewing for 2006 or buying your first HDHP with the minimum deductible that will be starting in 2006, make sure your HDHP is at least $1050 for an individuals or $2100 for a family plan.

The new Treasury levels for 2006 are as follows:

New Annual Contribution Levels for HSAs:

  • For 2006, the maximum annual HSA contribution for an eligible individual with self-only coverage is $2,700. (Note: for any individual, the maximum contribution is the lesser of this indexed amount or the deductible of the HDHP.)

  • For family coverage the maximum HSA contribution is $5,450.

  • Catch up contribution for individuals who are 55 or older is increased by statute from $600 in 2005 to $700 in 2006.

  • Both the HSA contribution and catch up contribution must be pro rated based on the number of months of the year a taxpayer has an HSA Qualified High Deductible Plan.

New Amounts for Out-of-Pocket Spending on HSA-Compatible HDHPs:

  •     The maximum annual out-of-pocket amounts 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 HSA-Compatible HDHPs:

  •     For 2006, the minimum deductible for HDHPs increases to $1,050 for self-only coverage and $2,100 for family coverage.

HSA Trustee Services does not sell insurance; we only open and service Health Savings Accounts/HSAs with our banking partner, HSA Trustee Bank, a division of Sutton Bank, so if you have any questions, please give us a call at 866-HSA-2010 or visit our website at http://www.hsatrusteeservices.com.

About HSA Trustee Services

HSA Trustee Services is a nationwide provider specializing in opening and servicing Health Savings Accounts (HSA) for individuals, families and groups since the inception of the HSA program in January 2004. HSA Trustee Services offers a "no monthly fee" HSA which includes their exclusive “HSA Rx Card” for further savings on prescriptions drugs. For more information on this program, or the other benefits of using hsa Trustee Services, please call 866-hsa-2010 or visit the website at http://www.hsatrusteeservices.com. HSA Trustee Services is dedicated to “Keeping the $avings in the Health Savings Account.”

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