Contributions to HSA accounts are tax-deductible. Earnings, such as interest and dividends, in the (HSA) health savings account are tax-exempt at the federal level. Withdrawals from a HSA are tax-free as long as the funds are used for qualified medical expenses. (See IRS Publication 502, Medical and Dental Expenses for what counts as qualified medical expenses.)

For 2012: $3,100 maximum contribution for individual coverage in your HSA; and $6,250 for family coverage. $1,000 for additional catch-up contributions for people age 55 or older.

Contributed by Robert Edwards, RT Edwards & Associates, PCCertified Public Accountants

Member ADCPA