Health Savings Account Blog

Isn't there a provision for 55 and older participants to be able to contribute an extra amount?

Also, my plan's open enrollment deadline is 11/09/2007. I thought I read somewhere that, if I opened an HSA by 12/01/2007, that I could contribute the full annual amount as if I had participated the entire year. Is that true?

Thanks, Tom.

Hi Tom,

Yes, individuals age 55 and over may deposit into their health savings account (and take a tax deduction on) an additional catch-up contribution of $800 in 2007.

And yes again. In fact, you have until 12/01/2007 to open your HSA and up until 04/15/08 to contribute the full annual amount for 2007. However, you must have your HSA-qualified insurance plan in place before you open your HSA.

What is the maximum "catch-up" amount for 2008?

Hi Chet,

The maximum "catch-up" amount for 2008 will be $900.

If I want to change my HSA provider can I roll over funds in my present account to the new account?

Absolutely!

My wife and I have high deductible family health insurance coverage through my employment. Can we both use her health savings account or do each of us need his/her own HSA?

Hi Tom,

I'm not sure I totally understand your question. If your family has a HDHP through your employer, why does your wife have the HSA?

Either way, if you have a family HDHP you can use one HSA for the entire family.

question about Tom's question regarding two accounts for a husband and wife. The treasury site seems to indicate two are needed. Does that mean two accounts IF two HDHP are used?

http://www.treasury.gov/offices/public-affairs/hsa/faq_setup.shtml#hsa6

I turn 55 in July 2008. May I contribute the $900 catch up in January 2008 for the entire year, or must the catch-up be prorated from July -Dec?

Hi Cathie,

Yes, if you have an HSA qualified high deductible health insurance plan for a full year, you can make the full catch-up contribution regardless of when your 55th birthday falls during the year.

Tom...in looking at the information provided by US Treasury, it states..."Your eligibility to contribute to an HSA is determined by the EFFECTIVE date of your HDHP coverage. If you do not have HDHP coverage for the ENTIRE year, you will NOT be able to make the maximum contribution. All contributions (including catch up contributions) MUST be PRO-RATED" You therefore can only deposit dollars based on the number of month's your HSA is in effect. If you opened it in December of 2007 - then you can deposit the value of one month -not the entire year.

Hi David,

Yes, if both the husband and wife are over age 55 and would like to make catch up contributions, they must have separate HSA accounts.

Margaret... your response about "pro-rated" deposits into your HSA was true for 2006. However, in 2007 they passed a law which did away with "pro-rating" for HSAs. So if you opened your HSA by December 1st, 2007 (the last eligible day to open an HSA to qualify for 2007 taxes), you could deposit the full allowed amount. This is also true for 2008 and foward.

What is the 2008 limit for this couple:
1) Employee will become 65 on March 7 2008
2) His Spouse (wife) is 57 years of age
3) Employee covers himself and his wife under employer sponsored plan with One HSA account.
SO.... I get that his limit is prorated for 2008 as he will only be able to contribute for 2 months. Can they contribute the full $2900 for his wife? Can they make a full catch-up contribution for her? Or must the $5800 + ONE catch-up be the prorated limit for the family? They file a joint return.

Hi Lisa,

You and your husband combined can contribute $5800, plus one $900 catch up provision. If you have two HSA accounts, then you can both make a $900 catch up contribution, for a total of $7600 between the two accounts.

There is no prorated contribution as long as you are both covered by an HDHP for the entire year.

My husband and I both qualify for, and opened separate Health Savings Accounts on 1 January 2008. However, he turned 65 and went on Medicare on February 1, 2008. I thought he could only contribute for one month, due to pro-ration. Your comment to Lisa said that had changed. Can we each contribute $2900 plus $900 for 2008? I searched online and couldn't find this change.

I wrote earlier today. I have checked with IRS again. I believe that if Lisa's spouse signs up for Medicare when he turns 65, his maximum contribution for 2008 would be prorated, and he could only contribute 2/12 of $3800. There is a lot of confusion on this subject, as I have received numerous conflicting answers. Can you confirm that this is correct?

Hi Nancy,

Sorry it's taken so long to get back to you on this. I just wanted to do a little more research to make sure this is accurate.

It is our understanding that the contribution would be pro-rated. If someone on an HDHP ceases to be covered by an HDHP during any calendar year, then their contribution, including their catch up contribution, is in fact pro-rated, regardless of the reason they cease to be covered.

My confusion with Lisa's example was that I assumed the husband would continue to be covered by an HDHP. I have altered that comment to cover that situation.

I hope this helps.

Thanks,
Wiley

If someone had an HSA account and then goes on Medicare with a medical and prescription supplement, does it make sense to keep the HSA? There's been conflicting advise as to whether funds could still be contributed to the HSA even though the High Rate Deductible Plan is no longer in effect.

Another question. If a person is in a financial situation where they would not have a pre-tax benefit from an HSA because their financial situation does not require them to pay Federal taxes, does it make sense to establish and use one?

Thanks for your input.

Hi Barbara,

You may no longer fund your account if you do not have a qualifying high-deductible health plan. However, money in the account continues to grow tax-deferred and can be used tax-free to pay for qualified medical expenses. So yes, you would want to keep it as long as there is still money in the account.

If you are not paying any federal or state income taxes, then you will not receive a tax break when contributing to your HSA. However, you still will have been able to put money into an account that grows tax-deferred, thus protecting you from future taxes on the growth of that money.

Regards,

Wiley Long

I have a HDHP with individual coverage only. My spouse has an HDHP for himself and our two children so his coverage would be treated as family coverage. What are our contribution limits for 2008 if we are each under 55 years of age, have our own separate HSA accounts and are NOT covered by the other's HDHP plan?
Thanks

Hi Marjorie,

The contribution limit into your individual HSA would be $2,900 for 2008. Your spouse/family can contribute up to $5,800 into their HSA for 2008.

Hi,

I have a question. I have an HSA health plan with my employer to which I have added my Kid only. My wife has a seperate HSA account through her employer and she uses the insurance provided by her company. Both have a High Deductible plan

My question is can we do that, i.e. have 2 HSA account one for me and one for my wife. Also I assume the total contribution by both of us should not exceed the annual limit for family which is $5800

Please clarify whether I am doing the right thing.

Thanks
Ram

I know there is a provision allowing a one time transfer from an IRA to a HSA without penalty for the IRA withdrawal. Can that also be done from a 401k to a HSA?

Hi Ram,

It is ok for a family to have as many HSA accounts as you want. Given that, it is perfectly acceptable for you and your wife to maintain two separate accounts.

You should note that the $5800 maximum contribute is per family, not per HSA account. So, whether your wife and you have one, two, or ten HSA accounts, the combined contribution to your accounts should not exceed a total of $5800.

If you ever need further assistance, please let us know. Unless your employer pays 100% of your premiums, you may want to consider switching to individual coverage that is not tied to your employer. If that is something that interest you, we would be happy to assist. That’s what we do best.

Hi Larry,

At this time (5/20/2008), HSA regulations only permit the one time roll over to come from an IRA account. No other form of retirement account qualifies.

I have an HDHP with individual coverage only. My spouse being slightly younger has an individual + kids HDHP for herself and our two children. If we decide to just use one HSA account for our family could I contribute the maximum family contribution of 5,800 or would I be limited to the individual contribution limit? I want the high family contribution, but only want to manage one HSA account. Is this possible or is better to have 2 HSA's?

Thanks,
Robert

Hi Robert,

It is perfectly fine to have 1 HSA account for your family and contribute the maximum family contribution.

Thanks,
Wiley