Businesses in Maine and individuals can buy less expensive health insurance policies with high deductibles with Health Savings Accounts (HSAs). Contributions to the accounts are made on a pre-tax basis, and the money can accumulate year after year tax free. It can also be withdrawn tax free to pay for a variety of medical expenses such as doctor visits, prescriptions, chiropractic care and premiums for long-term-care insurance.

Maine small businesses who participate can also contribute to accounts, on behalf of their employees.

The IRS announced the 2018 limits for individual and family coverage recently in Revenue Procedure 2017-37. They are determined after the IRS applies cost-of-living adjustment rules, and the changes in the Consumer Price Index for the relevant period.

• HSA Contribution Limits. The 2018 annual HSA contribution limit for individuals with self-only HDHP coverage is $3,450 (up from $3,400 for 2017), and the limit for individuals with family HDHP coverage is $6,900 (up from $6,750 for 2017).
• High-Deductible Health Plan (HDHP) Minimum Required Deductibles. The 2018 minimum annual deductible for self-only HDHP coverage is $1,350 (up from $1,300 for 2017) and the minimum annual deductible for family HDHP coverage is $2,700 (up from $2,600 for 2017).
• HDHP Out-of-Pocket Maximums. The 2018 maximum limit on out-of-pocket expenses (including items such as deductibles, co-payments and other amounts, but not premiums) for self-only HDHP coverage is $6,650 (up from $6,550 for 2017), and the limit for family HDHP coverage is $13,300 (up from $13,100 for 2017).

The Benefits of an HSA

• Claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you don’t itemize your deductions on Form 1040.
• Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
• Contributions remain in your account until you use them.
• Distributions may be tax free if you pay qualified medical expenses.
• HSAs are “portable.” It stays with you if you change employers or leave the work force.
• Interest or other earnings on the assets in the account are tax free.

Qualifying for an HSA

You must meet the following requirements to be an eligible individual and qualify for an HSA:

• You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month.
• You generally have no other health coverage except what is permitted under regulations. (Exceptions include dental, vision, long-term care, accident and specific disease insurance.)
• You aren’t enrolled in Medicare.
• You cannot be claimed as a dependent on another person’s tax return.

— Source: The IRS

If you are looking for health insurance options with tax benefits for your Maine small business, contact Filler & Associates to learn more about HSAs.