HSA Frequently Asked Questions

Contributing to an HSA

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 HDHP 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?

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 2005 is $2,650 if you have single coverage and $5,250 for a family. For 2006, these amounts are $2,700 and $5,450, respectively. 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.

Does my contribution depend on when I establish my HSA account or when my HDHP coverage begins?
Your eligibility to contribute to an HSA is determined by the effective date of your HDHP coverage. Your annual contribution depends on the number of months of HDHP coverage you have during the year (technically, the months where you have HDHP coverage on the first day of the month). The amount you can contribute is not determined by the date you establish your account. However, medical expenses incurred before the date your HSA is established cannot be reimbursed from the account.

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.

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.

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:

2005 - $600
2006 - $700
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.)

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.

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.