HSA Learning Center
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Contributing to an HSA_________________________< Back to Main Page

Contributions - The Basics

Distributions - The Basics

How much can I contribute to my HSA each year?

I have a very high deductible, is there a limit on how much I can contribute?

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

Does my contribution depend on when I establish my HSA account or when my coverage begins?

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?

Can I tak a tax deduction for my HDHP premium?

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?

I turned 55 this year. Can I make the full "catch-up" contribution?

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 HDHP coverage, but have a child/relative 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?

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Contributions to a Health Savings Account _____________________________^ TOP


Maximum Contributions
For 2007, the maximum you may contribute to a Health Savings Account (HSA) is the lesser of your deductible under the High-Deductible Health Plan (HDHP) and $2850 for single coverage or $5650 for family coverage. Minimum HDHP deductibles are $1100 for individuals and $2200 for families.

Catch-Up Contributions
Because a new savings program tends to favor younger people with more time to save, a "catch up" provision was included with HSA regulations. HSA holders age 55 and older may make additional annual contributions of $800, increasing by $100 each year to a maximum additional calendar year contribution of $1000 in 2009.

Employer Contributions
An employer may contribute to an employee's Health Savings Account (HSA), but the employer must make available comparable contributions on behalf of all "comparable participating employees." Contributions are considered comparable if they are the same amount or same percentage of the High-Deductible Health Plan (HDHP) deductible.

Contribution Deadlines
HSA contributions must be made for a specific year on or before the due date (without extensions) for filing tax returns for that year. So, for 2007, contributions must be made on or before April 15, 2008.

Higher HDHP Deductibles
You can purchase a High-Deductible Health Plan (HDHP) with a deductible beyond the HSA contribution limit. For example, a single person can purchase a $5000 deductible HDHP. However, that person's maximum 2007 HSA contribution would still be limited to the $2850 cap for single coverage.

HSA Contributions must be Cash
Health Savings Account (HSA) contributions must be in cash. For example, contributions can not be made in stock or other property.

Rollovers are Permitted
Rollover contributions from Archer MSAs and other HSAs are permitted. Rollovers are not subject toe the annual contribution limits and rollover contributions need not be in cash. Rollovers from an IRA, a health reimbursement arrangement (HRA), or from a health flexible spending arrangement (FSA) are now permitted. For more information, contract Great Lakes


Excess HSA Contributions
Contributions by an individual are not deductible to the extent they exceed the maximum limits. Excess contributions by an employer generate taxable income to the employee. In addition, a 6% excise tax is imposed on the excess funds.

The excise tax and any net income attributable to excess contributions are avoided if the excess contributions are paid to the HSA owner prior to federal income tax deadline for the year at issue.


Distribution of Funds from a Health Savings Account (HSA)______________^ TOP

Distributions for Qualified Expenses
When distributions from a Health Savings Account (HSA) are used to pay for qualified medical expenses of the account owner, his or her spouse, or dependents, the distributions are excluded from gross income -- even if the individual is not currently eligible to make HSA contributions.

Distributions not used for Qualified Expenses
Distributions not used for qualified medical expenses are includable in gross income and, for applicants under age 65, subject to an additional 10% tax.

For Ineligible Individuals
If the Health Savings Account (HSA) beneficiary is no longer "eligible" (e.g., over age 65, entitled to Medicare or no longer enrolled in a High-Deductible Health Plan (HDHP), distributions used to pay qualified medical expense continue to be exempt from gross income.

Determination of Qualified Medical Expense
The person who establishes an HSA makes the qualified medical expense determination and should maintain verifying expense records. Great Lakes HSA makes no judgments on what may or may not be a qualified medical expense.

In addition, employers who make contributions to an employee's HSA cannot make a qualified medical expense determination. Determining qualified medical expense is always the job of the HSA owner.

HSA Distributions are Optional
When you incur a qualified medical expense, you are not obligated to pay the expense with available Health Savings Account (HSA) funds. You face a trade-off: You can spend after-tax income (not good), in return maximizing the long-term savings in your HSA (good).

Financial professionals advise, in most circumstances, using your HSA funds to pay necessary qualified medical expenses. Keep in mind, if HSA funds are not used to pay qualified medical expenses, those HSA funds will eventually be subject to income tax.

HSA Distributions after Death
If the Health Savings Account (HSA) owner dies, the HSA becomes the property of the named beneficiary. If the spouse is the beneficiary, the surviving spouse is subject to income tax only on HSA distributions not used for qualified medical expenses.

If the HSA passes to a person other than the spouse, the HSA terminates as of the date of death, and the person is required to include in gross income the assets of the HSA at the date of death. The taxable amount is reduced by any HSA payments for the decedent's qualified medical expenses, if paid within one year after death.

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How much can I contribute to my HSA each year?
Your annual HSA contribution cannot exceed the deductible of your HDHP.  For example, if you choose a plan with a deductible of $1,100, you may not deposit more than $1,100 in your HSA for that year. If you want to save more, you must choose an HDHP with a higher deductible.  If you are age 55 or older, you can also make additional catch-up contributions (see below).

I have a very high deductible, is there a limit on how much I can contribute?
The most you can put into your account for 2007 is $2,850 if you have single coverage and $5,650 for a family.   These amounts will be increased for inflation in future years.

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

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

Can I take a tax deduction for my HDHP premium?
Not at this time.  President Bush has proposed allowing individuals not covered by an employer plan to deduct their HDHP premiums as well as their HSA contributions. However, this proposal will not be effective until enacted by Congress.

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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?
Yes, individuals 55 and older who are covered by an HDHP can make additional catch-up contributions each year until they enroll in Medicare.  The additional “catch-up” contributions to HSA allowed are as follows:

2007 - $800
2008 - $900
2009 and after - $1,000

I turned 55 this year. Can I make the full “catch-up” contribution?
If you had HDHP coverage for the full year, you can make the full catch-up contribution regardless of when your 55th birthday falls during the year.  If you did not have HDHP coverage for the full year, you must pro-rate your catch-up contribution for the number of full months you were eligible, i.e., had HDHP coverage.

If both spouses are 55 and older, can both spouses make “catch-up” contributions?
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?
Each spouse is eligible to contribute to an HSA in their own name, up to the amount of the deductibles under their respective policies.  However, each spouse’s contribution cannot exceed the contribution limit of $2,650 for individuals for 2005, $2700 for individuals for 2006.  (The catch up contributions are in addition to these limits.)

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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?
The following examples describe how much can be contributed under varying circumstances.  Assume that neither spouse qualifies for catch-up contributions. 

Example 1:  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 $5,000 to an HSA.  

Example 2:  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 $2,200 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 $5,000, to be divided between them by agreement. 

Example 3:  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 with the lowest annual deductible ($3,000).  The maximum combined HSA contribution by husband and wife is $3,000, to be divided between them by agreement.

Example 4:  Husband and wife have family HDHP coverage with a $5,000 deductible.  Husband has no other coverage. Wife also has family coverage with a $200 deductible.  Husband and wife are treated as having family coverage with the lowest annual deductible ($200).  Neither husband nor wife is an eligible individual and neither may contribute to an HSA. 

Example 5:  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 $5,000 to an HSA.

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

I’m a single parent with HDHP coverage but have child/relative 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?
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 amount of your HDHP deductible to your HSA.

May a self-employed person contribute to an HSA on a pre-tax basis?
No.  Self-employed persons may not contribute to an HSA on a pre-tax basis and may not take the amount of their HSA contribution as a deduction for SECA purposes.  However, they may contribute to an HSA with after-tax dollars and take the above-the-line deduction.

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