Health Savings Accounts Part 3

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January 5, 2018
Health Savings Accounts Part 3

Image Copyright Ted Grussing Photography – Used with permission

A few weeks ago 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 on ways to contribute to your HSA.

If you have your own HSA there are a few different ways to contribute:

  • As an employee you can elect a recurring contribution amount deducted from your income
  • You can also change or even stop contributing during any year
  • Your employer may also contribute your HSA – it never hurts to check!
  • If you decide not to contribute from your payroll, you can deposit into your HSA account the same way as you would a regular bank account
  • Your bank can transfer from your checking or savings into your HSA

Remember, there are contribution limits, so check with your plan administrator for specifics.

If you don’t really have the money to put into an HSA there may be another option open to you if you have an IRA. A little known part of the tax code allows a once in a lifetime transfer from a traditional IRA directly into an HSA without taxes and no early distribution penalty.

This is a great way to move taxable funds from an IRA into an account for tax free medical expenses, if the need arises.

A couple of things to be cautious about:

  • Only the taxable portion of an IRA can be transferred—check with your tax advisor.
  • HSA contribution limits apply to any IRA transfers for that year. So be careful, and postpone until late in the year. AND always seek advice from a tax professional before doing this.

Keep in mind that situations differ and not everyone will qualify for a Heath Savings Account plan. Check with your employer and your tax adviser, or use an online tool or research to learn about your options. You must get with a qualified HSA trustee in order to set up a plan for yourself.

Do not take our word for it. Do your research to see if an HSA is right for you!

Have a great weekend!


Publication 969 (2016), Health Savings Accounts and Other Tax-Favored Health Plans. (n.d.). Retrieved from