October 31, 2005 – The IRS has issued Revenue Procedure (Rev. Proc.) 2005-70 containing the 2006 cost-of-living adjustments (COLAs) associated with health savings accounts (HSAs). The adjusted figures reflect maximum contribution limits for HSAs. HSAs are available to individuals who are covered by high deductible health plans (HDHPs) that have certain minimum and maximum out-of-pocket expense limits. The limitations that define an HDHP have also increased for 2006.
The maximum annual contribution limit for 2006 is the lesser of the HDHP deductible, or
$2,700 for single, and
$5,450 for family.
In addition, the 2006 catch-up contribution limit for individuals who are age 55 and older, which is defined in IRC Sec. 223(b)(3), is $700.
COLAs relating to the definition of HDHP are also included in Rev. Proc. 2005-70. For 2006, an HDHP is a health plan with an annual deductible not less than $1,050 for self-only coverage or $2,100 for family coverage, with the annual out-of-pocket expenses not exceeding $5,250 for self-only coverage and $10,500 for family coverage.
Rev. Proc. 2005-70 may be accessed at http://www.irs.gov/pub/irs-drop/rp-05-70.pdf.