A Health Savings Account (HSA) is a tax-exempt trust or custodial account established exclusively for the purpose of reimbursing qualified medical expenses for you, your spouse, and your dependents.
You are eligible to make or receive an HSA regular contribution if, with respect to any month, you:
A HDHP is a plan with an annual deductible of at least $1,500 in 2023 for single (self only) coverage or $3,000 in 2023 for family coverage. These amounts are subject to cost-of-living adjustments (COLAs).
Yes. For HSA purposes, the HDHP must limit out-of-pocket expenses. The maximum out-of-pocket expenses, which include money applied to your deductible and your co-insurance for covered charges, must be no more than $7,500 in 2023 for single coverage and no more than $15,000 in 2023 for family coverage. These amounts are subject to cost-of-living adjustments (COLAs).
You establish a HSA the same way you establish an IRA – with a qualified custodian.
If you meet the eligibility requirements for a HSA, you, your employer, your family members, and any other person (including non-individuals) may contribute to your HSA. This is true whether you are self-employed or unemployed.
A HSA is not a “use it or lose it” account. Your funds will not expire if you do not use them within the year. Funds in your HSA rollover into the next calendar year when there is a balance.
Beginning in 2018, HSA contributions are no longer limited by a health plan’s deductible amount, thus raising contribution amounts for most HSA holders. Please refer to the table below for 2022 and 2023 contribution limits.
A HSA owner may take a one time (once-in-a-lifetime) tax free distribution from his or her IRA, and transfer that amount to an HSA. The provision does not apply to SEPs or to SIMPLE retirement accounts.
| Self-Only Coverage | |
|---|---|
Self-Only Coverage 2022 |
$3,650.00 |
Self-Only Coverage 2023 |
$3,850.00 |
| Family Coverage | |
|---|---|
Family Coverage 2022 |
$7,300.00 |
Family Coverage 2023 |
$7,750.00 |
Additionally, a “catch-up” contribution is available for eligible individuals who are age 55 or older by the end of their taxable year and have not enrolled in Medicare. The chart that follows shows these additional amounts.
| Tax Year | |
|---|---|
Tax Year 2022 |
$1,000.00 |
Tax Year 2023 |
$1,000.00 |
Write a check or use your HSA debit card to pay for qualified medical expenses to your health services provider. You may also make a direct withdrawal of funds from HOMEBANK. It is very important to save your receipts and statements. You will need them to complete your annual tax return.
Contributions to a HSA are fully deductible. The earnings grow tax deferred, and distributions for qualified medical expenses are tax-free. Consult with your tax or legal professional for guidance.
Contributions made by you, your family members, and any other person on your behalf, which do not exceed the maximum annual contribution amount, are deductible by you when determining your adjusted gross income for your federal tax return. You cannot deduct employer contributions, and these contributions will not count as wages for federal income tax purposes.
Regular and catch-up HSA contributions can be made at any time for a taxable year up to and including your federal income tax return due date, excluding extensions, for that taxable year. The due date for most taxpayers is April 15.
Distributions from your HSA, used exclusively to pay for qualified medical expenses for you, your spouse, or your dependents, are excludable from your gross income. Any other distributions are includable in your gross income and are subject to an additional 10% tax on the amount includable, except in the case of distributions made after your death, your disability, or your attainment of age 65. HSA distributions that are not rolled over will be taxed as income in the year distributed, unless they are used for qualified medical expenses. Any qualified medical expenses must be incurred only after the HSA has been established.
