Your HSA contributions and earnings aren’t generally subject to taxation by most states and other taxing entities such as cities. However, this may change at any time. You should talk with your tax adviser or state department of revenue for more information.
You can contribute in a lump sum or multiple times throughout the year. You can change how much you contribute at any time during the year; you don’t need a life event change. If you’re age 55 or older, you can contribute another $1,000 per year. This is a “catch-up” contribution to help you save for health care expenses in retirement.
This means the amount you can contribute is based on a few things.
- Do you have self-only or family coverage?
- Did you have coverage under the HDHP plan for the entire year? If not, you may have to prorate how much you can contribute. Proration means you contribute just for the number of months you have the HDHP.
- Are you 55 or older?
You may want to speak with your tax advisor. They can help you understand how much you can contribute to your HSA. You might also find it helpful to review IRS Publication 969 at www.irs.gov.
Example: You have a self-only HDHP coverage. For 2018, the contribution limit is $3,450. If you’re 55 or older and you remain eligible for the full year, you can contribute up to $4,450.
If your HDHP covers your spouse who’s 55 or older, they can also make a catch-up contribution. If your spouse wants to do this, they would have to open up their own HSA. Only one person can own an HSA. This means that your spouse can’t contribute their catch-up contribution to your HSA.
Keep in mind, once you’re covered under Medicare you’re no longer eligible to contribute to an HSA.
You should remove excess contributions by the tax filing deadline for that year. If you don’t remove the excess contribution, that amount will be subject to income taxes and a 6% penalty tax. If you have more questions about your contributions, you should talk with your tax advisor.
When you pay yourself back, you can do so through a linked bank account. This will withdraw funds from your HSA and deposit them in to your personal account. It can take up to 48 hours for you to see the funds in your account.
To link a bank account, log in and click on Financial Center. Select Health Savings Account from the drop down menu. Under My Account on the left hand side of the screen, click on Link My Bank Accounts and follow the instructions.
If you prefer to receive a check, use the Make an HSA Payment feature and enter your name as the “payee”.
To use your HSA funds, you must have received the care on or after the effective date of your HSA. You can find more information www.irs.gov. Refer to IRS Publications 969 and 502.
You can still contribute to your HSA for the months that you were eligible to do so. You have until the tax filing deadline to contribute. The tax filing deadline is generally April 15 of the next year.
If you continue your health plan under COBRA or enroll in another qualified High Deductible Health Plan (HDHP), you may still be able to contribute to your HSA.
If you want to close your HSA, you’ll need to complete the Account Closure form. You can find this form in the Resource Center of your online account. You can also call us to request a form. After you close your HSA, you can still view your deposits, payments, and withdrawals on the PayFlex member website.