Can I transfer funds from my IRA into my HSA and vice versa?

by | Sep 15, 2021

The government does allow a one-time transfer of funds from an IRA to an HSA. However, you can only roll your HSA funds into another HSA not an IRA.

– The transferred amount, when combined with other HSA contributions for the year, may not exceed your annual maximum contribution.

– Also, after making such a transfer, you must continue to participate in a qualifying high-deductible health plan for 13 consecutive months, beginning in the month of the IRA-to HSA transfer. If you do not, you will be subject to income taxes and a 20 percent penalty tax on the transferred amount, except in the case of death or disability.

– Such a transfer may be an option if you incur significant medical expenses and find yourself unable to afford to make the maximum HSA contribution.

Can my spouse and I have a joint HSA?

by | Sep 15, 2021

No, only one person can be named the account owner. If both you and your spouse have qualified HDHP coverage, and want to both make pre-tax HSA contributions or take advantage of the catch controbution once you are 55 or older, then you would each need to open an HSA.

If both you and your spouse have family coverage under qualified high-deductible health plans, the maximum total tax-deductible HSA contribution both of you can make (including employer contributions) is the IRS limit for family coverage. This contribution can be divided between you and your spouse however you wish. If you and/or your spouse are eligible to make catch-up contributions, you may each contribute your eligible catch-up contribution to your individual HSA.

Can unused funds in my HSA roll over into the next year?

by | Sep 15, 2021

Yes, unsued will carryover into the next year. There is no limit or cap on how large the balance can grow in your HSA. However, the annual limit you can contribute to the HSA may not exceed the maximum contribution amount set by the IRS each year, plus the “catch up” contribution for those ages 55 to 65.

Health Savings Account Resources

by | Sep 13, 2021

Cost Savings

  1. To determine how much cost savings the HSA may provide you and/or your family, you will need to consider several items.
  2. Your Total Contributions (Remember: Contributions as well as accrued interest to the HSA are tax free.)
  3. Your Total Estimated Expenses (Remember: Distributions on qualified medical expenses from the HSA are tax free.)
  4. The Premium Difference Between Your HSA Plan and Other Plan Options (Remember: Monthly premiums for the HDHP insurance are typically lower than those of a Traditional PPO.)

Your Estimated HSA Cost Savings Example

Traditional PPO + FSA HDHP + HSA
Gross Annual Pay $60,000 $60,000
Maximum Annual Health Care FSA Contribution $3,050 $7,750
Estimated Annual Family Premium -$13,000 -$11,000
Adjusted Gross Pay $43,950 $41,250
Estimated Tax Rate (15%) $6,622.50 $6,255
Estimated Annual Expenses $3,050 $3,050
Remaining FSA vs. HSA Balance + $0 $4,450
Remaining Take Home Pay with FSA vs. HSA $34,677.50 $37,045

YOUR TAKE HOME PAY COULD BE $2,367.50 MORE WITH THE HSA

All figures in this table are estimates and based on an annual salary and maximum contribution limits to the benefit account. Your salary, tax rate, health care expenses, and tax savings may be different.

Who Is Eligible?

In order to be eligible to enroll and contribute to a Health Savings Account (HSA), you must first ensure you meet the necessary requirements. If your answers to the below questions match ours then you are likely eligible to open and contribute to an HSA.

Question Answer
Are you currently enrolled or covered by a HSA-qualified high deductible health plan? YES
Is the annual deductible for your health insurance plan higher than $1,350 for individual coverage or higher than $2,700 for family coverage? YES
Is the annual maximum out-of-pocket for your health insurance plan less than $6,750 for individual coverage or less than $13,500 for family coverage? YES
Are you covered by any other health plan (such as a spouse or parent) that is not considered a HDHP? NO
Are you currently enrolled in Medicare (Part A or Part B) NO
Are you currently enrolled in either a Health Care Flexible Spending Account (FSA) or Health Reimbursement Arrangement (HRA) that reimburses you for medical expenses in addition to dental and vision expenses? NO

Contribution Limits

Self-Only Coverage 2023 2024 2025
Maximum Annual HSA Contribution $3,850 $4,150 $4,300
HSA Catch-up Contribution (Age 55 or Over) $1,000 $1,000 $1,000
Minimum Annual Deductible for HDHP $1,500 $1,600 $1,650
Maximum Out-of-Pocket Limit for HDHP $7,500 $8,050 $8,300
Family Coverage 2023 2024 2025
Maximum Annual HSA Contribution $7,750 $8,300 $8,550
HSA Catch-up Contribution  $1,000 $1,000 $1,000
Minimum Annual Deductible for HDHP $3,000 $3,200 $3,300
Maximum Annual Out-of-Pocket Limit for HDHP $15,000 $16,100 $16,600

 

Do I get taxed on distributions from my HSA?

by | Sep 13, 2021

Distributions from your HSA used exclusively to pay for qualified medical expenses for you, your spouse, or dependents are excluded from your gross income. Your HSA funds can be used for qualified expenses and will continue to be free from federal taxes and states taxes (for most states) even if you are not currently eligible to make contributions to your HSA. If you take a non-qualified distribution, you are subject to ordinary income tax and a 20 percent penalty tax. If you are age 65 or older, disabled, or for the year in which you die, the 20 percent penalty may not apply.