Frequently Asked Questions

2013 HSA financial amounts and limits, 

The following table compares them with the standards that applied for the 2012 calendar year.

• The maximum annual contribution to a self-only HSA for HDHP coverage increased from $3,100 to $3,250 for 2013.
• The maximum annual contribution to a family HSA for HDHP coverage increased from $6,250 to $6.450 for 2013.
• The age 55 and over annual catch up additional contribution remains at a $1,000 for 2013.
• The minimum self-only HDHP deductible increased from $1,200 to $1,250 for 2013.
• The minimum family HDHP deductible increased from $2,400 to $2,500 for 2013.
• The maximum self-only HDHP out-of-pocket expense amount (which includes deductibles and co-payments as well as other expenses) increased from $6,050 to $6,250 for 2013.
• The maximum family HDHP out-of-pocket expense amount (which includes deductibles and co-payments as well as other expenses) increased from $12,100 to $12,500 for 2013.

Source:  IRS Revenue Procedure 2012-26 the IRS has announced the new inflation-adjusted increases for Health Savings Account (HSA) contributions and high-deductible health plan (HDHP) deductibles. http://www.irs.gov/pub/irs-drop/rp-12-26.pdf   [Material updated May, 2012]

A:  A Health Savings Account (HSA) is a tax-exempt savings account designed to pay your medical expenses.  It is used in conjunction with a High Deductible Health Plan (HDHP).  If you are eligible, it allows you to save money, tax-free, for future medical expenses.

A:  A High Deductible Health Plan (HDHP) is a health insurance plan with a large minimum deductible.  To qualify as an HDHP, the plan must have a minimum deductible of $1,150 for self-only coverage or $2,300 for family coverage.  The plan’s out-of-pocket expenses, including deductibles and co-pays, cannot exceed $5,800 for self-only coverage or $11,600 for family coverage.  However, an HDHP may have no deductible for preventive care and can charge higher co-pays and co-insurance fees for non-network services.

A:  Benefits of an HSA:

• Earn tax-free interest and income.
• Gain from tax-deductible contributions whether or not you itemize your tax deductions.
• Build resources for medical care needs.
• Roll over unused HSA funds from year to year. 

To be an eligible individual and qualify for an HSA, you must meet the following requirements:

• You have a high deductible health plan (HDHP) on the first day of the month
• You are not enrolled in Medicare
• You cannot be claimed as a dependent on someone else’s tax return
• You have not received any health benefits from the Veterans Administration or one of their facilities, including prescription drugs, in the last three months

A:  Starting your HSA is easy.  No special permission is needed from the Internal Revenue Service (IRS).  Simply complete the online enrollment via the web site or phone for instructions to open your account.

A:  Yes.  Unused HSA balances may be carried from year to year during a participant’s lifetime.

A:  Contributions to an HSA may be made by any person (an employer, a family member, or any other person) on behalf of an eligible individual.

A:  Yes, beginning with tax year 2007, you may make a one-time contribution to your HSA of an amount distributed from your IRA. However, the contribution must be made in a direct trustee-to-trustee transfer. Amounts distributed from your IRA will not be included in your income to the extent that the distribution would otherwise be included in income. Therefore, such distributions are not subject to the 10 percent additional tax on early distributions.

The following rules apply:

• The amount that can be distributed from the IRA and contributed to an HSA is limited to the maximum contribution to the HSA computed on the basis of, individual vs. family coverage under the HDHP at the time of the contribution.
• The amount that can be contributed to the HSA is reduced by the amount contributed from the IRA.
• No deduction is allowed from the amount contributed from an IRA to an HSA.
• You are allowed only one distribution and contribution during your lifetime, except if a distribution and contribution are made during a month in which you have individual coverage as of the first day of the month. An additional distribution and contribution may be made during a subsequent month within the taxable year in which the individual changes to family coverage. The limit applies to the combination of both contributions. 
• If you don’t remain an eligible individual in accordance with “The 12 Month Rule,” the amount of the distribution and contribution will be included in your gross income. “The 12 Month Rule,” or testing period, is the period beginning with the month of the contribution and ending on the last day of the 12th month following such month. The amount will be included for the taxable year of the first day during the testing period that the individual is not an eligible individual. A 10 percent additional tax also applies to the amount included.
• An exception applies if the individual ceases to be an eligible individual due to death or disability. 

A:  Yes, beginning with tax year 2007, you may make a one-time contribution to an HSA of the amount distributed from your Health FSA or HRA without violating the rules for such arrangements.  However, the contribution must be made through a direct transfer to your HSA.

The amount that can be distributed from the Health FSA or HRA may not exceed an amount equal to the lesser of:

• The balance in the Health FSA or HRA as of September 21, 2006 or;
• The balance in the Health FSA or HRA as of the date of the distribution.

The balance in the Health FSA or HRA as of any date is determined on a cash basis (i.e., expenses incurred that have not been reimbursed as of the date the determination is made are not taken into account).

Any amounts contributed to the HSA are excluded from your income for income and employment tax purposes and are not taken into account in applying the maximum deduction limitation for HSA contributions.  Please note that this provision is limited to one distribution with respect to each Health FSA or HRA of the individual.

Here is an example:
Let’s say you had a balance in your Health FSA as of September 21, 2006 of $2,000 and the balance in your account as of January 1, 2008 is $3,000.  Under the new rules, you may distribute an amount not to exceed $2,000 from your Health FSA to your HSA.  However, if you cease to be eligible as of June 1, 2008, the $2,000 contribution amount will be included in your gross income and subject to a 10 percent additional tax. If instead, the distribution and contribution are made as of June 30, 2008 when the balance in the Health FSA is $1,500, the amount of the distribution and contribution is limited to $1,500.

A:  If excess contributions are made to your HSA, you must generally pay a 6% excise tax on the excess contributions you or your employer made to your HSA. For a complete explanation, visit www.irs.gov and see IRS Form 5329:  Additional Taxes on Qualified Plans (including IRAs) and Other Tax Favored Accounts, to calculate the excise tax.

If you made excess contributions, you may withdraw some or all of the excess contribution and not pay the excise tax on the amount withdrawn. However, you must do the following:

• Withdraw these excess contributions by the due date, including extensions, of your tax return;

• Withdraw any income earned on the withdrawn contributions and include the earnings in “other income” on your tax return for the year you withdraw the contributions and earnings; and
• Do not claim a deduction on your IRS Form 1040 for the amount of the withdrawn contributions.

If your employer makes an excess contribution and the excess was not included in box 1, Form W-2, you must report the excess as “other income” on your tax return. However, you may withdraw some or all of the excess employer contributions and not pay the excise tax on the amount withdrawn if you do the following:

• Withdraw these excess contributions by the due date, including extensions, of your tax return;
• Withdraw any income earned on the withdrawn contributions and include the earnings in “other income” on your tax return for the year you withdraw the contributions and earnings; and
• Do not claim an exclusion from income for the amount of the withdrawn contributions

A:  For individuals and their spouses covered under a High Deductible Health Plan (HDHP) between ages 55 and 65, the HSA contribution limit is increased by $1,000 in calendar year 2009.

A:  If you have individual health care coverage, the maximum annual contribution that you can make to an HSA is $3,000 for 2009. If you have family health care coverage, the maximum annual contribution is $5,950 for 2009.

A:  Beginning with tax year 2007, an individual or family covered under an HDHP in a month other than January, may make a full HSA contribution for the year. So, even if you become eligible and enroll in an HDHP in December of 2007, you can still make an HSA contribution for 2007 as if you had been enrolled in the HDHP for all of 2007.

However, if you don’t remain an eligible individual in accordance with “The 12 Month Rule,” the amount of the distribution and contribution will be included in your gross income. “The 12 Month Rule,” or testing period, is the period beginning with the month of the contribution and ending on the last day of the 12th month following such month. The amount will be included for the taxable year of the first day during the testing period that the individual is not an eligible individual. A 10 percent additional tax also applies to the amount included.

Here is an example:
Let’s say that you enroll in an HDHP in December of 2007 and are otherwise an eligible individual in that month. For sake of the example assume that you are not an eligible individual in any other month in 2007. You could make an HSA contribution for 2007 as if you had been enrolled in the HDHP for all of 2007. In addition, if you ceased to be an eligible individual (e.g., if you stopped being covered under an HDHP) in June 2008, an amount equal to the HSA deduction attributable to treating you as an eligible individual for January through November 2007 would be included in your income in 2008.

A:  No.  HSAs are individual accounts.  Each spouse who is an eligible individual and wants to make contributions to an HSA must open a separate HSA.  In cases where catch-up contributions are involved, only the individual that meets the age requirements can contribute this amount. 

For example, a husband and wife are covered under an HDHP and only one HSA is opened with the husband as the account owner.  If the wife qualifies for the catch-up contribution, her catch-up contribution cannot be placed into the husband’s account. The wife would have to open an HSA to make her catch-up contribution.