WASHINGTON -- To reflect the increases in the cost of living,the Internal Revenue Service has raised Health Savings Accountlimits for next year.

Touted as the next big thing since IRAs, HSAs are tax-freesavings accounts that can be used to pay for medical expensesincluding prescription and over-the-counter drugs incurred byindividuals, spouses or dependents. These accounts are accompaniedby high-deductible comprehensive insurance policies that coverpreventive care and larger medical bills. Unused HSA money rollsover from year to year and can then be used to pay for medical careup to the plan's deductible

In 2007, the maximum contribution that can be made to an HSA foremployees with single coverage will be $2,850, up from $2,700 in2006, while the maximum contribution for those with family coveragewill be $5,650, up from $5,450.

In addition, the maximum out-of-pocket expense will rise to$5,500, up from $5,250 in 2006, and to $11,000, up from $10,500,for those with family coverage.

High-deductible health insurance plan minimums have also gone upfrom $1,050 to $1,100 for single coverage and from $2,100 to $2,200for family coverage.