Read about Tim and Shirley to see how catch-up contributions work for people age 55 and older*.

About Tim and Shirley
Tim and Shirley have been married for 30 years and both turned 55 this year. Still working and healthy, they show no signs of slowing down any time soon. This year, they decided to do a wellness check on their health plan to see if they could save on their monthly premiums while still keeping up with health care costs.

Their Health Plans
Tim and Shirley get health insurance through their employers. They have also contributed to FSAs in the past to help cover qualified medical expenses. While the insurance is good, the monthly premiums for no-deductible plans can be pretty expensive. And, they've sometimes left money behind in their FSAs because they overestimated how much they'd need for health care costs.

Combining a High-Deductible Health Plan with an HSA
The couple ran some numbers and decided that choosing high-deductible health plans with lower monthly premiums made sense for them – as long as they each opened an HSA to cover current and future costs.

Because they are both 55 years old, they are each able to make a catch-up contribution of $1,000 to their HSA this year and every year until they become eligible for Medicare. So, for 2011, they can each deposit $4,050 into their accounts ($3,050 limit for individuals plus the $1,000 catch-up contribution). What's more, they can use both accounts to pay for either of their qualified medical expenses.

* Hypothetical example is for illustrative purposes only. All events, persons and results described herein are entirely fictitious and amounts will vary depending on your unique circumstances. Any resemblance to real events or persons, living or dead, is purely coincidental.  Current rates are variable and may change at any time.  Consult a qualified legal, tax or financial advisor for your specific situation.