Anyone may contribute to the HSA of an eligible individual. For example, if an employee establishes an HSA, that employee, his/her employer, or both may contribute to the employee's HSA in a given year. If a self-employed or unemployed individual establishes an HSA, that individual may contribute to the HSA. Family members may also make contributions to an HSA on behalf of another family member as long as that other family member is an eligible individual.
How do I make contributions?
Contributions can be made through payroll deduction by your employer, deposit at any branch location, or by mailed deposit.
How much can I contribute to my HSA?
As of 2007, your annual HSA contribution may not exceed IRS limits of $2,850 for individual coverage or $5,650 for family coverage. IRS limits are indexed for inflation on an annual basis. Visit the Treasury Department's Health Savings Accounts information page for updates.
How is the contribution limit computed for an individual who begins self-only coverage under an HDHP later in the year (i.e. June 1) and continues to be covered under the HDHP for the rest of the year?
Effective January 1, 2007, your annual contribution limit for the year will not be reduced for HSAs that are opened "mid-year." You may make the full year's contribution with no adjustments as long as you remain covered by a qualifying HDHP for at least 12 months following the end of the plan year in which you opened your HSA "mid-year". If you cease to be covered under a HDHP before that time period ends, all contributions will be considered as taxable income and if you are under 65, will be subject to an additional 10% penalty. Visit the Treasury Department's Health Savings Accounts information page for updates.
When can HSA contributions be made? Is there a deadline for contributions to an HSA for a taxable year?
For an established HSA, contributions for the taxable year can be made in one or more payments at any time after the year has begun and prior to the the deadline (without extensions) for filing your federal income tax return for that year. For most taxpayers, this is April 15 of the year following the year for which contributions are made.
What happens when HSA contributions exceed the maximum amount that can be deducted or excluded from gross income in a taxable year?
Contributions to an HSA by an individual, or on behalf of an individual, are not tax deductible when they exceed the limits. Contributions by an employer to an HSA for an employee are included in the gross income of the employee if they exceed the limits or if they are made on behalf of an employee who is not an eligible individual. In addition, if not withdrawn in a timely manner, an annually assessed excise tax of 6% is imposed on the accountholder for excess individual and employer contributions.
What are catch-up contributions for individuals age 55 or older?
For individuals between the ages of 55 and 65, the HSA contribution limit is increased by $800 in calendar year 2007. This catch-up amount will increase by $100 annually until it reaches $1,000 in calendar year 2009. For eligible individuals ages 55 and older the annual catch-up contributions are as follows: Year 2007 2008 2009 and beyond
Catch-up Contribution $800 $900 $1000
What happens to the remaining balance at the end of the year?
Any remaining balance will carry over to the next year. There is no use-it or lose-it requirement.
Are rollover contributions to HSAs permitted?
Rollover contributions from Archer MSAs and other HSAs are permitted. Qualifying rollover contributions must be made in cash and are not subject to annual contribution limits. Rollovers from an IRA, a health reimbursement arrangement (HRA), or a health flexible spending account (FSA) to an HSA are permitted only under conditions, and restrictions apply. Contact your legal or tax advisor for more information.
Can I enroll in both an HSA and a health Flexible Spending Account (FSA)?
If you enroll in both an HSA and an FSA or Health Reimbursement Arrangement (HRA), you cannot make deductible contributions to the HSA for that coverage period if the FSA or HRA are "general purpose" arrangements that pay or reimburse for qualified medical expenses. However, you may still be able to make deductible contributions to an HSA even if you are also covered under an FSA or HRA if those arrangements are "limited purpose" FSAs or HRAs that restrict reimbursements to certain "permitted benefits" such as vision, dental or preventive care benefits. Other permissible combinations include "suspended" HRAs and "post-deductible" FSAs or HRAs. Contact your legal or tax advisor to review these situations to find the best option for you.