Here is a list of HSA facts that I gathered up. It’s sort of like an FAQ, except that I’m too lazy to write out the questions.
HSA Facts: Contribution Limits
- contributions limits change annually and are set by the IRS
- 2017: $3,400 for single and $6,900 for family
- $1,000 extra (catch-up) if you are 55+
HSA & HDHP
- you must have a high deductible health plan (HDHP) to qualify for an HSA
- HDHP’s are offered by HMO’s, PPO’s, and POS’s
- HDHP’s are identified by their minimum deductible level of at least $1,300 individual or $2,600 family.
Contributing To An HSA
- you can transfer money into the HSA just like any other bank account
- if you pay with after-tax money, you’ll recoup the taxes once you file your income taxes
- anyone can contribute to your HSA, your momma, your employer, your drug dealer
HSA’s & Other Insurances
- you cannot have an HSA if you have health insurance also through medicare or tricare or your employer
- however, you can have an HSA with a HDHP while your partner or dependents have their own insurance plans
- it’s okay to be covered by your employer’s wellness program (but not health insurance)
HSA & FSA and HRA
- you can’t have an HSA & FSA at the same time
- however you can have a limited FSA or a limited HRA along with your HSA
Deadline For Contributions
- you can contribute up until April 15th of the following tax year
- you cannot go back in time to top up or contribute even if you would meet qualifications
- you can open an HSA anytime in the year but your employer will have an enrollment period
HSA Contribution Qualifications
- must have a HDHP
- cannot be covered by other health insurance such as work, medicare, etc.
- you don’t need earned income to have an HSA
Qualified Medical Expenses
- pretty much anything that’s need to manage an illness, including health/dental/vision expenses
- here is my recent post on all the IRS allowable medical expenses
- cosmetic or elective medical expenses aren’t included
- cannot be used for health insurance premiums unless it’s COBRA
- HSA money can be used for long-term care insurance
Rollover
- you can roll over an old HSA into a new one
- there is often a fee for rolling money over
- rollovers are not taxable events
Portability of HSA’s
- the money is yours and you can take it with you as long as it’s kept with an HSA trustee (any HSA trustee)
- there might be fees when transferring (closing) an account
Cashing Out
- there is a 20% tax penalty for cashing out an HSA and…
- …there would also be income taxes owed on the early cash-out
- you can wait until age 65 and there would be no tax penalties nor any income taxes owed
Tax Savings
- HSA contributions are 100% federally tax-deductible
- all states except for CA/NY/AL will allow for a full HSA tax deduction
- HSA contributions can be invested in whatever funds are available per the trustee
- investments grow tax-free much like an IRA or 401k
- you can withdraw at any time in the future for reimbursements reasons
- after age 65 there is no 20% tax penalty
- after age 65 you can “reimburse” yourself for all your healthcare expenses over your lifetime and pay no income taxes
Spending From An HSA
- once you reach the HDHP’s deductible, you can start paying for medical expenses using your HSA account
- most plans will give you a debit card
- or you can wait until the end of the year to get reimbursed
- or you can leave the money in the HSA until you turn 65 (the best way to profit from an HSA)
HSA Penalties
- early distributions are subject to 20% tax penalty if not used to pay for medical expenses
- if withdrawn early you would also pay income taxes on this withdrawal
HSA Fees
- each HSA account will have its own fees set by the trustee, that’s how they make their money
- here is a list of possible fees to make your fucking head spin:
- monthly maintenance fee
- HSA account transfer fee
- account closure fee
- debit card issue fee
- ATM fees
- excess contribution fee
- check fee
- document fee
- paper copy fee for statements
- check processing fee
- custodial fee
An HSA is an Account
- each account has a routing number and account number
- each individual would need their own account, even married couples
- anyone can contribute to your HSA account (family, employer)
HSA Trustee
- your HSA is held by a trustee, that’s the company you have your HSA with (HSABank, Optum, BofA, etc.)
- they set the terms, fees, penalties of the account
- it’s up to them as to what investments you are able to make
HSA & Disability
- you can use your HSA balance in case of disability and forgo the 20% tax penalty
- you would still pay income taxes on the distributions
HSA & Death
- the HSA would go to your next-of-kin or your assigned beneficiary
- if your beneficiary isn’t your partner then the money stops being an HSA and would be part of your taxable estate
HSA & Investing
- healthcare professionals will benefit from an HSA by using it as an investment account
- start contributing to an HSA throughout your life and use the investment as income after age 65
- this method allows for completely tax-free money income
HSA’s & RMD’s
- as of 2017 there are no required minimum distributions (RMD’s) on an HSA