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Eligible
Health Insurance Policy
An eligible health insurance policy is an insurance plan
with an annual deductible of at least $1,550 and not more
than $2,350 for individuals and an annual deductible of
at least $3,100 and not more than $4,650 for families.
In addition, the maximum out-of-pocket expenses must be
no more than $3,100, including the deductible for individual
coverage and $5,700 for family coverage. These threshold
amounts are subject to increases based on the CPI annually.
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Contributions
and Limits
There
are no minimum contribution requirements for an MSA. However,
the maximum annual contribution for individual coverage
is 65% of the deductible amount and 75% of the deductible
for family coverage. The maximum MSA contribution for
2000 assuming the maximum individual deductible limit
of $2,350 is $1,527.50 (65% of $2,350) and the maximum
MSA contribution for family coverage is $3,487.50 (75%
of $4,650).
The annual contribution limit is the sum of the limits
determined separately for each month, based on the individual’s
status and health plan coverage as of the first day of
the month.
Contributions can be made to an MSA either by the individual
or by the individual’s employer. Contributions cannot
be made by both the employer and the employee in the same
year. Additionally, individuals cannot contribute to an
MSA if their spouse is covered by the same high deductible
insurance plan and the spouse’s employer contributes to
an MSA of the spouse.
No after-tax contributions can be made and excess contributions
are subject to taxation.
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Disbursements
Distribution
from an MSA for the medical expenses of an individual
(for a single coverage MSA) and his spouse or dependents
(for a family coverage MSA) generally are excludable from
income. Medical expenses are defined under Internal Revenue
Code Section 213(d).
Individuals can also withdraw money from an MSA without
penalty to pay for long term care insurance, to continue
coverage under COBRA and/or to pay for health plan insurance
premiums when collecting unemployment compensation.
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