Why consider an HSA?
Contributions are made pre-tax and grow tax-free and distributions for qualified medical expenses are not taxed.
Unused funds rollover year to year and the balance can be carried with you if you leave an employer or retire.
When the account reaches a certain balance, funds can be invested for tax-free growth. Balance can be used for Medicare, retiree medical premiums and qualified out-of-pocket expenses.
How much can I contribute each year?
The IRS sets an annual limit on how much can be contributed to an HSA.
2019: $3,500 single; $7,000 family
2020: $3,550 single; $7,100 family
The limit includes employee contributions and any employer contributions that may be made. If you’re age 55 or older, you can make additional catch-up contributions of $1,000.
What is the difference between individual and family coverage/contribution limits?
If you cover only yourself under your HDHP, you are limited to the single HSA contribution limit. If you cover anyone else under your HDHP (spouse or child) you can contribute up to the family limit.
Can my spouse and I have a joint HSA?
No, HSAs cannot be shared. Each spouse can have their own HSA.
I’m enrolled in Medicare, can I contribute to an HSA?
Once enrolled in Medicare (not just eligible), you can no longer contribute to an HSA. However, you can use your HSA to pay for Medicare expenses and premiums.
Can I have an FSA and also contribute to an HSA?
No, if you’re contributing to or have a balance in a Flexible Spending Account (FSA) you’re not eligible to contribute to an HSA. Your spouse’s FSA will also make you ineligible. A Limited Purpose FSA can be used.
What is a Limited Purpose FSA?
A Limited Purpose FSA is a tax-advantaged healthcare account that can be paired with an HSA. It allows reimbursement for dental and vision expenses and possibly post-deductible expenses.
What can I use my HSA for?
To pay for qualified expenses for yourself, your spouse and dependent children up to age 19 (or age 24 if full-time student). See IRS Publication 502 for a full list of qualified expenses. If account is used for non-qualified expenses, distribution may be subject to tax and penalties.
Updated for tax year 2020
Updated for tax year 2019