The IRS announced contribution limits for Health Savings Account (HSA) for 2012.
HSA Contribution Limits
You can only contribute to an HSA if you have a High Deductible Health Plan (HDHP).
The IRS also defines what qualifies as an HDHP. For 2012, an HDHP with individual coverage must have at least $1,200 in annual deductible and no more than $6,050 in annual out-of-pocket expenses. For family coverage, the numbers are minimum $2,400 in annual deductible and $12,100 in annual out-of-pocket expenses.
HSA vs. FSA
I don’t have an HSA because although my employer offers an HDHP, the annual employee premium on the HDHP is only $100 lower than the employee premium on the regular PPO plan. Saving $100/year in employee premium would increase my annual deductible by $1,000.
Instead of using an HSA, I use an FSA — Flexible Spending Account. A key difference between an FSA and an HSA is that the money in an FSA can’t be carried over. It has to be spent within the year plus a 2-1/2 month grace period. It creates some forecast challenge. If I put in too much, as I did last year, I scramble to find ways to spend it down. If I put in too little, as I did this year, I don’t get as much tax savings.
Reference: IRS Revenue Procedure 2011-32