Couples 55 and older may contribute more than $10,000 to health savings accounts


Senior couples in the US will be able to contribute more than $10,000 annually toward tax-free health savings accounts.

Under guidance the IRS announced Tuesday and which takes effect next year, people can contribute up to $4,150 to an HSA each year, an increase of 7.8%. Families can reserve up to $8,300, up 7.1%, under the new rules.

The amount that individuals and couples age 55 and older who don’t already have Medicare can contribute to an HSA will increase to $5,150 and $10,300, respectively. That includes the $1,000 catch-up contribution they can already set aside in an HSA each year.

The large annual cost-of-living adjustment was expected given rising inflation, according to Kevin Robertson, senior vice president and chief revenue officer at HSA Bank.

But he said the ability for older couples to contribute more than $10,000 and seniors more than $5,000 helps set an important psychological precedent.

«It sounds like a lot of money,» he said. «It will get people’s attention, and more will say that now they need to consider a contribution to the HSA.»

HSAs are promoted as a way to grow and set aside tax-free money for medical expenses. As the Society for Human Resource Management observed: «Contributions are made on a pre-tax basis, money in accounts grows tax-free, and withdrawals for qualified medical expenses are tax-free.»

The average HSA created in 2005 has now accumulated more than $50,000 in investments and deposits, according to Becoming dataan independent investment advisor and consultant in the HSA industry.

That’s already about one-sixth of the roughly $315,000 that Fidelity’s retiree health care cost estimate calculates they will be spent cumulatively by retirees on medical expenses.

«The vast majority of people aren’t maximizing their contributions each year,» Robertson said. The new contribution limits «will allow people to think about their needs…and get people more involved.»

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