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  • 2011 Health Savings Account (HSA) changes

    Health care reform changes to HSAs which go into effect January 1, 2011

    • Over-the-counter (OTC) medicines and drugs will no longer be eligible for tax-free reimbursement from an HSA without a doctor’s prescription. This includes pain relievers, sleep aides, and cough medicines.
    • Certain OTC purchases, such as insulin, bandages, and medical devices, continue to be eligible for tax-free purchase from an HSA without a prescription. Accountholders should always keep their receipts and save doctor’s prescriptions for OTC purchases with their tax records.
    • The tax penalty for non-qualified distributions from an HSA will increase from 10 percent to 20 percent (for accountholders under age 65 and not disabled).
    • Family insurance coverage may be extended to children up to age 26 but HSA distributions can only be made for qualified expenses incurred by tax dependents. If a tax dependent is listed on an accountholder’s federal income tax, typically their qualified expenses can be paid from the HSA.

    2011 contribution limits

    The Internal Revenue Service (IRS) 2011 annual contribution limits for HSAs are the same as the 2010 annual contribution limits. The 2011 minimum deductible and maximum out-of-pocket limits for HSA-compatible health plans also remain unchanged.

      Tax year 2011
    HSA annual contribution limits Single – $3,050
    Family – $6,150
    HSA catch-up contributions $1,000 per individual age 55 or older
    Minimum deductible Single – $1,200
    Family – $2,400
    Maximum out-of-pocket expenses Single – $5,950
    Family – $11,900

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