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HSA Contribution Limits for 2013

Written by Nickel - 21 Comments

It’s never too early to look ahead to next year. With that in mind, I wanted to highlight the 2013 HSA contribution limits. As many of you know, we’ve been using our health savings account as an additional retirement investment vehicle. That is, we’ve been contributing to it and saving up the documentation related to our medical expenses, but not withdrawing the funds.

The only drawback has been that my employer’s HSA custodian has horrible investment options, so I’ve been waiting for the money to reach a critical mass before transferring it to another custodian for investing. The good news is that my employer is switching custodians on July 1, so hopefully the investment options will be better (they can’t be worse!) and I won’t have to deal with transferring it myself.

Anyway… Back to the issue of contribution limits. In 2012, individuals can contribute $3,100 and families can contribute $6,250. In 2013, those limits will increase to $3,250 and $6,450 — so individuals will be able to stash an extra $150 and families will be able to stash an extra $200.

As a reminder, you can only contribute to an HSA if you have a high-deductible health plan. The current definition of “high deductible” (which will remain unchanged in 2013) is $1,200 for an individual and $2,400 for a family.

I can’t speak for anyone else, but we’ve come out way ahead by switching to an HDHP (plus HSA) from a more traditional PPO plan. What about you? Do you have an HDHP? If so, are you happy with it vs. the alternatives?

Hat tip to The Finance Buff for digging up the limits.

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Published on May 11th, 2012
Modified on May 16th, 2012 - 21 Comments
Filed under: Insurance, Saving & Investing, Taxes

About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

21 Responses to “HSA Contribution Limits for 2013”

1
Thad P @ thadthoughts.com Says:
May 11th, 2012 at 6:02 pm
We are in an HSA as well. I was not aware that “high deductible” was so low. I had visions of it being $10K or so.
2
BG Says:
May 11th, 2012 at 6:21 pm
The extra $200 will help.

Thad) That deductible amount is the IRS minimum. My deductible is over $4k, for example…
3
Lance@MoneyLife&More Says:
May 11th, 2012 at 6:56 pm
I just started a new job and decided to use the HDHP with HSA. I rarely go to the doctor so I think I will like it. That way when I do use it I should have plenty of HSA money and whatever I don’t use now I will eventually use guaranteed. Much better than a FSA in my case with my employer.
4
aa Says:
May 12th, 2012 at 12:50 am
My company’s HSA premium isn’t so low (even after employer matching). So I can save more with the other regular low premium plan than the tax saving of HSA. I just feel that money in HSA will lose to inflation if left too long.
5
BG Says:
May 12th, 2012 at 10:43 am
aa) the HSA isn’t just a cash account, you can invest in mutual funds like a retirement account (within the HSA). That is what nickle does. I end up spending all $6k in my HSA each year, so I don’t do investing in my HSA.
6
Martha Says:
May 12th, 2012 at 2:40 pm
Does anyone know of a no-cost/low-cost option for a self-employed person to setup an account. The two companies I was referred to by Blue Cross had a $400 setup charge and a monthly maintenance fee. Clearly, a big give-away to financial institutions.
7
Martha Says:
May 12th, 2012 at 2:45 pm
Does anyone know of options for a self-employed person to setup an account. The two companies I was referred to by Blue Cross had a $400 setup charge and a monthly maintenance fee. Are there any no-cost/low-cost options for the self-employed?

(Sorry for the duplicate post. Need to check-off the box to get updates.)
8
BG Says:
May 13th, 2012 at 8:27 am
$400 to setup an HSA?!?

The HSA is not related to the HDHP insurance company. The only requirement for opening an HSA is that you are enrolled in an HDHP somewhere. For example, my HDHP is with Aetna, my HSA is at Chase Bank.

Being self employed changes nothing here. You want an individual HSA…not a business account, or anything expensive.
9
William Cowie Says:
May 13th, 2012 at 9:30 am
My wife and I lucked into this by accident a few years ago, and went for it. We didn’t care about the investing part so much, just the ability to sock away something extra. There were a few incentives our employer offered and the result was a tidy little sum by the time we were forced to retire in 2010.
10
John Says:
May 13th, 2012 at 6:43 pm
We use http://www.hsaadministrators.info/ for our HSA administration. Very reasonable fees, and – to me, more importantly – we can invest in low cost Vanguard mutual funds. I’m self employed, too, and would definitly recommend HSA Administrators.
11
MoneySmartGuides Says:
May 13th, 2012 at 10:18 pm
I love my HSA! I use it exactly as you do: I use it as a retirement savings vehicle. I rarely go to the doctor for anything major now and when I do go, I pay with out of pocket funds.

And like you, my custodian’s investment options aren’t that great. We just started the HSA so I don’t have enough to transfer out to investment. But when I do have enough, I will be making that transfer.
12
Stephanie Says:
May 14th, 2012 at 12:05 pm
Is there any good way to calculate which health plan is right for you? I’ve been having trouble the past few years deciding between the regular PPO and the HDPPO, but my health care costs are usually pretty high (I reach my deductible mid-year).

I’m not really the best at analytics, so it’s hard for me to compare.

Thanks!
13
PC Says:
May 14th, 2012 at 4:46 pm
Nickel,

I am not especially well informed about the HSAs; but I understand the purpose of the HSAs is that they have a tax benefit in order to encourage savings for future healthcare costs.

Healthcare costs are usually large and unexpected in nature. Wouldnt you want those ’savings’ to be readily available, i.e. liquid ?

It seems slightly odd to encourage stock market investments to be made using ‘healthcare emergency funds’.

That said, your strategy is fine assuming you have cash set aside, sufficient for those high deductibles.
14
BG Says:
May 14th, 2012 at 8:09 pm
PC) let’s say you are contributing $6k to your HSA yearly, and you have a $12k out of pocket maximum any given year. Why not invest HSA money over that amount in investments with time horizons appropriate based on the risks of needing that money for medical expenses in the future?

I think HSA investing is extremely wise once you have established a sizeable buffer.
15
steve Says:
May 30th, 2012 at 10:47 pm
You can get a no fee account with https://www.sfcu.org

There are no fees. Great deal. It is a credit union. They have some loop holes so anyone can join across the country.

Their HSA account pays 2.529. It is incrediable rates. These are not teaser rates. I have gotten these rates for a couple years. They have great service and NO FEES at all. I would highly recommend them.
16
LucasL Says:
June 17th, 2012 at 8:42 pm
My wife and I are looking into opening an HSA. I’m curious if the contributions must be made at one time or if you can space them out during the year.
Thanks for any feedback!
17
Deb Says:
August 28th, 2012 at 5:05 pm
I love our HDHP and HSA, but what’s going to happen when the new healthcare law and Vermont’s(where I live)
new single payer plan goes into effect. They are saying that they will do away with the HSA’s. That will stink. Also, I was under the inpression that the law says the funds in the HSA account is for health related expenses only, so how can you transfer into an investment account. Pretty sure there will be legal tax ramifications for that!!
18
Nickel Says:
August 28th, 2012 at 10:16 pm
Deb: Don’t know about the Vermont situation but with respect to your other question, depending on the account custodian, you can invest inside an HSA. There are no tax ramifications of this because you’re not transferring it out of the HSA.
19
K Says:
September 14th, 2012 at 11:43 pm
Deb – You can invest HSA funds, because anything you earn on your HSA funds would be re-routed back to the HSA if you ever withdrew from the investment account. From there, you need to have a qualified expense to withdraw. Otherwise, you are right that you would end up paying taxes.

For those of you who have no health issues, that’s great that you can use it as an investment vehicle. That’s not the case for everyone though (we don’t get to choose if/when we need to go to the doctor or get sick). I have had some major health issues (I’m healthy now, but require expensive follow-up) and I’m fairly young, so I expect to use most if not all of the funds annually.

I wanted to add that one thing that is great with HSAs vs FSAs is that there is no use it lose it rule, so you can carry over any excess. For this reason, we can safely contribute the maximum without knowing how much your health expenses will be.
20
Fred Johnson Says:
October 31st, 2012 at 11:37 pm
I’ve had an HSA for 3 years. I contribute the maximum each year and treat it like a retirement account meaning I don’t withdraw from it but I still get an income tax deduction on my 1040. I use HSA Bank and they allow me to pick a few mutual funds they have chosen or I can use Ameritrade. I’ve chosen to use Ameritrade and have purchased a diversified group of stocks and a bond fund. So far, so good.
21
Ryan Says:
November 5th, 2012 at 3:48 pm
I refuse to invest any of my HSA funds (other than in the default money market fund) because a severe market correction could affect my ability to pay for health care.

My wife is soon having a baby and she has already reached her personal deductible in office visits and ultrasounds! It’s something to consider when deciding how much to contribute each year.

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