The Tax Relief and Health Care Act of 2006 has a bunch of goodies in it.

Previously the tax law limited HSA contributions to the lesser of an indexed annual limit or the maximum deductible under the qualifying high-deductible plan. The law repeals the second limitation starting in 2007. So if you have the lowest qualifying family insurance plan deductible in 2007 – $2,200 – your maximum 2007 HSA contribution will be $5,650, instead of $2,200.

Furthermore, until now, employers who first became eligible for HSAs in mid year – say, because their employers switched to high-decuctible coverage in mid year – could only make a pro-rated HSA contribution. For example, if your employer’s family coverage became HSA eligible with a $5,000 deduction on July 1, 2006, you could only contribute $2,500 to your HSA in 2006.

The new law allows you to make a full HSA contribution if you are HSA-eligible on the last day of the year. You have to stay HSA qualified for 12 months, or part of your HSA contribution gets recaqtured in income with a 10% excise tax to boot.