Health Savings Accounts Part 2

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December 22, 2017
Health Savings Accounts Part 2

Image Copyright Ted Grussing Photography – Used with permission

Last week we began a discussion on Health Savings Accounts, or HSA’s. For qualified individuals, HSA’s can be another employee benefit like 401(k)’s. Today we would like to focus some of the eligibility requirements of HSA’s that you need to consider.

HSA requirements:

  • You can only have one of the two kinds of plans: either a High Deductible Health Plan or a Consumer Driven Health Plan. The plan must be clearly defined as HSA eligible.
  • You cannot be enrolled in Medicare.
  • You cannot have any other health care coverage.
  • You cannot be claimed as a dependent on someone else’s tax return.

It’s also important to note that if you get new insurance (not a new HSA) you can continue to use the dollars in your HSA, but cannot contribute new money. There are yearly contribution limits to HSA’s. But, there is also a ‘catch-up’ contribution allowed per person over the age of 55.

As for employee and employer contributions, they are tax free! And you can make contributions into you HSA all the way through April 15th of a year which will count towards the previous year. For example: you have until April 15th of 2018 to contribute for the 2017 year.

Keep in mind that not everyone will qualify for a Heath Savings Account plan. Check with your employer or use an online tool or research to see if you qualify. You must get with a qualified HSA trustee in order to set up a plan for yourself.

Do your research to see if an HSA is right for you!

Have a very merry Christmas and a wonderful Holiday season!

Sources:

Publication 969 (2016), Health Savings Accounts and Other Tax-Favored Health Plans. (n.d.). Retrieved from https://www.irs.gov/publications/p969