Contributing to an HSA

How much can I contribute to my HSA each year?

Do my HSA contributions have to be made in equal amounts each month?

Can my employer contribute to my HSA?

Do my contributions provide any tax benefits? 

If my employer contributes to my HSA, does that also provide me any tax benefit?

Can I make contributions through my employer on a “pre-tax” basis? 

Can I claim both the “above-the-line” deduction for an HSA and the itemized deduction for medical expenses? 

I’m over 55 and would like to make catch-up contributions to my HSA, like I’ve done with my IRA. Is that possible?

If both spouses are 55 and older, can both spouses make “catch-up” contributions?

If each spouse has self-only HDHP coverage (neither spouse has family coverage), how much can we contribute? 

If both spouses have family HDHP coverage but one spouse has other coverage, are both spouses eligible for an HSA? How much can each spouse contribute? 

Does tax filing status (joint vs. separate) affect my contribution? 

I’m a single parent with family HDHP coverage, but have a child that can be claimed as a dependent for tax purposes, and this dependent also has non-HDHP coverage. Am I still eligible for an HSA? 

May a self-employed person contribute to an HSA on a pre-tax basis? 

When may HSA contributions be made? Is there a deadline for contributions to an HSA for a taxable year?

What happens when HSA contributions exceed the maximum amount that may be deducted or excluded from gross income in a taxable year?

How is money deposited into an HSA? What frequency?

Must employers who make contributions to an employee’s HSA determine whether HSA distributions are used exclusively for qualified medical expenses?

What are the income tax consequences after the HSA account beneficiary’s death?

May I roll money from my IRA or Roth IRA to my HSA?

May I roll money from my SEP or SIMPLE IRA to my HSA?

If I am currently in a calendar year FSA with a 2.5 month Grace Period, when may I begin to contribute to an HSA?

How much can I contribute to my HSA each year?  Top
Effective January 1, 2007, regardless of your deductible, you may contribute, per calendar year, up to the IRS annually indexed maximum regardless of your coverage type (single vs. family). If you are age 55 or older, you can also make additional “catch-up” contributions.

The “full contribution rule” allows a full-year’s worth of HSA contributions for someone who is HSA-eligible for only a portion of the year. Under the full-contribution rules, an individual who becomes covered under a high deductible health plan (HDHP) in a month other than January and who is HSA-eligible on December 1 of that year, is treated as having been an eligible individual during every month of that year, and will be allowed to make contribution for those months during the year before the individual actually enrolled in an HDHP.

  • Individuals who enroll in the HDHP by December 1 can make a full-year contribution to the HSA that year.
  • Individuals must be covered by a qualified HDHP and remain an eligible individual for 12 months after the end of the calendar year in which they enrolled in an HDHP.
  • Individuals not covered by an HDHP for 12 months after the end of the calendar year in which they enrolled in an HDHP are subject to income tax and a 10% excise tax on HSA contributions for months not covered by an HDHP.

CLICK HERE TO VIEW THE CURRENT INDEXED AMOUNTS FOR HSAs

Do my HSA contributions have to be made in equal amounts each month?  Top
No, you can contribute in a lump sum or in any amounts or frequency you wish. However, your account trustee/custodian (bank, credit union, insurer, etc.) can impose minimum deposit and balance requirements.

Can my employer contribute to my HSA?  Top
Contributions to HSAs can be made by you, your employer, or both. All contributions are aggregated to determine whether you have contributed the maximum allowed. If your employer contributes some of the money, you can make up the difference.

Do my contributions provide any tax benefits?   Top
Your personal contributions offer you an “above-the-line” deduction. An “above-the-line” deduction allows you to reduce your taxable income by the amount you contribute to your HSA. You do not have to itemize your deductions to benefit. Contributions can also be made to your HSA by others (e.g., relatives). However, you receive the benefit of the tax deduction.

If my employer contributes to my HSA, does that also provide me any tax benefit?   Top
If your employer makes a contribution to your HSA, the contribution is not taxable to you the employee (excluded from income).

Can I make contributions through my employer on a “pre-tax” basis?   Top
If your employer offers a “salary reduction” plan (also known as a “Section 125 plan” or “cafeteria plan”), you (the employee) can make contributions to your HSA on a pre-tax basis (i.e., before income taxes and FICA taxes). If you can do so, you cannot also take the “above-the-line” deduction on your personal income taxes.

Can I claim both the “above-the-line” deduction for an HSA and the itemized deduction for medical expenses?  Top
You may be able to claim the medical expense deduction even if you contribute to an HSA. However, you cannot include any contribution to the HSA or any distribution from the HSA, including distributions taken for non-medical expenses, in the calculation for claiming the itemized deduction for medical expenses.

I’m over 55 and would like to make catch-up contributions to my HSA, like I’ve done with my IRA. Is that possible?  Top
Yes, individuals 55 and older who are covered by an HDHP can make additional catch-up contributions of $1,000 into an HSA in their own name each year until they enroll in Medicare. The additional “catch-up” contributions to HSA allowed are as follows:

2009 and after – $1,000
  • Individuals who enroll in the HDHP by December 1 can make a full-year catch-up contribution to the HSA that year.
  • Individuals must be covered by a qualified HDHP and remain an eligible individual for 12 months after the end of the calendar year in which they enrolled in an HDHP.
  • Individuals not covered by an HDHP for 12 months after the end of the calendar year in which they enrolled in an HDHP are subject to income tax and a 10% excise tax on HSA catch-up contributions for months not covered by an HDHP.

If both spouses are 55 and older, can both spouses make “catch-up” contributions?  Top
Yes, if both spouses are eligible individuals and both spouses have established an HSA in their name. If only one spouse has an HSA in their name, only that spouse can make a “catch-up” contribution.

If each spouse has self-only HDHP coverage (neither spouse has family coverage), how much can we contribute?   Top
Each spouse is eligible to contribute to an HSA in their own name, up to the single IRS HSA maximum contribution as set annually by the IRS.

CLICK HERE TO VIEW THE CURRENT INDEXED AMOUNTS FOR HSAs

If both spouses have family HDHP coverage but one spouse has other coverage, are both spouses eligible for an HSA? How much can each spouse contribute?   Top
The following examples describe how much can be contributed under varying circumstances. Assume that neither spouse qualifies for “catch-up contributions”.

Example: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also has self-only coverage with a $200 deductible. Wife, who has coverage under a low-deductible plan, is not eligible and cannot contribute to an HSA. Husband may contribute up to the family IRS HSA maximum contribution.
Example: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also has self-only HDHP coverage with a $2,000 deductible. Both husband and wife are eligible individuals. Husband and wife are treated as having only family coverage. The combined HSA contribution by husband and wife cannot exceed the family IRS HSA maximum contribution to be divided between them by agreement.
Example: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also has family HDHP coverage with a $3,000 deductible. Both husband and wife are eligible individuals. Husband and wife are treated as having family HDHP coverage and may contribute up to the the family IRS HSA maximum contribution to be divided between them by agreement.
Example: Husband and wife have family HDHP coverage with a $5,000 deductible. Husband has no other coverage. Wife also is enrolled in Medicare. Wife is not an eligible individual and cannot contribute to an HSA. Husband may contribute the family IRS HSA maximum contribution.

Does tax filing status (joint vs. separate) affect my contribution?   Top
Tax filing status does not affect your contribution.

I’m a single parent with family HDHP coverage but have a child that can be claimed as a dependent for tax purposes, and this dependent also has non-HDHP coverage. Am I still eligible for an HSA?   Top
Yes, you are still eligible for an HSA. Your dependent’s non-HDHP coverage does not affect your eligibility, even if they are covered by your HDHP. You can contribute up to the IRS annually indexed amount for family coverage.

May a self-employed person contribute to an HSA on a pre-tax basis?   Top
No. Self-employed persons may not contribute to an HSA on a pre-tax basis. However, they may contribute to an HSA with after-tax dollars and take the above-the-line deduction.

When may HSA contributions be made? Is there a deadline for contributions to an HSA for a taxable year?  Top
Contributions for the taxable year can be made at the convenience of the individual or the employer, at any time prior to the time prescribed by law (without extensions) for filing the eligible individual’s federal income tax return for that year, but not before the beginning of that year. For calendar year taxpayers, the deadline for contributions to an HSA is generally April 15 following the year for which the contributions are made. Although the annual contribution is determined monthly, the maximum contribution may be made on the first day of the year.

What happens when HSA contributions exceed the maximum amount that may be deducted or excluded from gross income in a taxable year?  Top
Contributions by individuals to an HSA, or if made on behalf of an individual to an HSA, are not deductible to the extent they exceed the limits. Contributions by an employer to an HSA for an employee are included in the gross income of the employee to the extent that they exceed the limits or if they are made on behalf of an employee who is not an eligible individual. In addition, an excise tax of 6% for each taxable year is imposed on the account beneficiary for excess individual and employer contributions. However, if the excess contributions for a taxable year and the net income attributable to such excess contributions are paid to the account beneficiary before the last day prescribed by law (including extensions) for filing the account beneficiary’s federal income tax return for the taxable year, then the net income attributable to the excess contributions is included in the account beneficiary’s gross income for the taxable year in which the distribution is received but the excise tax is not imposed on the excess contribution and the distribution of the excess contributions is not taxed.

How is money deposited into an HSA? What frequency?  Top
Each time the money is to be deposited, the employer forwards to FlexBank a request to make the company/employee deposit via an ACH transfer along with a listing of employees for whom the deposits should be made. Monies transferred are then electronically deposited into each HSA owner’s account.

Must employers who make contributions to an employee’s HSA determine whether HSA distributions are used exclusively for qualified medical expenses?  Top
No. The same rule that applies to trustees or custodians applies to employers. Individuals who establish HSAs make that determination and should maintain records of their medical expenses sufficient to show that the distributions have been made exclusively for qualified medical expenses and are therefore excludable from gross income.

What are the income tax consequences after the HSA account beneficiary’s death?  Top
Upon death, any balance remaining in the account beneficiary’s HSA becomes the property of the individual named in the HSA as the beneficiary of the account. If the account beneficiary’s surviving spouse is the named beneficiary of the HSA, the HSA becomes the HSA of the surviving spouse. The surviving spouse is subject to income tax only to the extent distributions from the HSA are not used for qualified medical expenses. If, by reason of the death of the account beneficiary, the HSA passes to a person other than the account beneficiary’s surviving spouse, the HSA ceases to be an HSA as of the date of the account beneficiary’s death, and the person is required to include in gross income the fair market value of the HSA assets as of the date of death. For such a person (except the decedent’s estate), the includable amount is reduced by any payments from the HSA made for the decedent’s qualified medical expenses, if paid within one year after death.

(Q) May I roll money from my IRA or Roth IRA to my HSA?  Top
(A) Yes. The rules allow for a one-time tax-free trustee to trustee transfer of IRA funds into an HSA, provided:

  • The amount contributed to the HSA is subject to the maximum annual contribution limits. Amounts transferred from the IRA plus any additional employer or employee contributions will be applied against the maximum annual contribution limit.
  • The individual must be covered by an HDHP and remain an eligible individual for 12 months after the transfer. If not, the funds transferred will be treated as taxable income and subject to a 10% excise tax.

CLICK HERE TO VIEW THE CURRENT INDEXED AMOUNTS FOR HSAs

(Q) May I roll money from my SEP or SIMPLE IRA to my HSA?  Top
(A) No, SEP and SIMPLE IRAs are excluded from rollover.

(Q) If I am currently in a calendar year FSA with a 2.5 month Grace Period, when may I begin to contribute to an HSA?  Top
(A) The current rule allows an individual to contribute to an HSA as long as he or she has a zero balance in the FSA on the last day of the plan year.