Health Savings Accounts
How much can be contributed to an HSA?
Prior to 2007, a participant was limited to his or her new HDHP deductible amount up to the annual statutory maximum. Under the new HSA rules which are effective January 1, 2007, a participant can contribute up to the maximum statutory limits, even if the participant’s actual deductible for their qualified High Deductible Health Plan is less than these maximums.
For 2008, the annual statutory maximum is $2,900 for individual coverage and $5,800 for family coverage. These maximums are adjusted annually. Individuals age 55 or older can also make an additional “catch-up” contribution. The catch-up contribution for 2008 is $900. These annual maximum contributions can be made for in any year a participant becomes an eligible individual regardless of the month this occurs. However, if a participant becomes eligible in any month other than January, the participant must remain eligible (i.e., enrolled in a HDHP plan) for the 12 month period following the tax year in which the participant first became eligible, or the amount contributed will be subject to tax and a 10% penalty.
If the participant rolls over funds from his or her HCFSA and/or HRA, the participant can still contribute up to the maximum statutory limits, in addition to the rollover amount. If the participant transfers money from his/her IRA that amount will reduce what the participant can contribute under the annual statutory maximums.
View additional questions:
- What is a Health Savings Account (HSA)?
- How do employees qualify to open an HSA?
- When can contributions be made to an HSA?
- Can employer's still offer their regular Health Care Flexible Spending Account (HCFSA) Plan to HSA participants?
- Do employers have to amend the Cafeteria Plan to allow for pre-tax contributions to the HSA?
- How much can be contributed to an HSA?
- Can money be rolled over from an employee's Health Flexible Spending Account (HCFSA) or Healthcare Reimbursement Account (HRA) into an HSA?
- Can a participant transfer money from his or her Individual Retirement Account (IRA) into an HSA?
- Who can contribute to an HSA?
- What can the participant use the HSA money for?
- How are withdrawals from an HSA treated if they are not used for qualified medical expenses?
- Are contributions to and distributions from an HSA reported to the IRS?