Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans

This official IRS publication, Publication 969, explains various tax-advantaged plans that help individuals manage healthcare expenses. It details eligibility requirements, contribution limits, qualified expenses, and tax benefits associated with these programs:

A. Health Savings Accounts (HSAs): Tax-exempt accounts paired with high-deductible health plans (HDHPs) for qualified medical expenses.

B. Medical Savings Accounts (MSAs): Similar to HSAs, but only available to individuals with specific employer-sponsored health plans (no longer offered by new employers).

C. Health Flexible Spending Arrangements (FSAs): Allow pre-tax contributions for qualified medical and dependent care expenses, with use-it-or-lose-it rules.

D. Health Reimbursement Arrangements (HRAs): Employer-funded accounts used to reimburse qualified medical expenses, with varying contribution limits and rules set by employers.

Key Points to remember about Publication 969:

A. Eligible individuals: Eligibility for these plans varies. Generally, you must be enrolled in a High-Deductible Health Plan (HDHP) to qualify for an HSA or MSA. Employers typically determine eligibility for FSAs and HRAs.

B. Tax advantages: Contributions to all these plans are typically made with pre-tax dollars, reducing your taxable income. Additionally, qualified medical expenses reimbursed from these accounts are generally not taxed.

Key updates for 2024:

  • Increased contribution limits: The maximum contribution limits for both self-only and family coverage HSAs have increased for 2024.
  • Telehealth and remote care services: Clarifies that individuals with HDHPs who receive telehealth and other remote care services can still contribute to their HSAs under specific circumstances.