General Questions

  1. What is a Health Savings Account ("HSA")?
  2. Who is eligible for a Health Savings Account?
  3. What Is an “HSA Qualified Health Plan”?
  4. Who can contribute to a Health Savings Account?
  5. How much can I contribute to a Health Savings Account?
  6. How is money deposited in my HSA?
  7. How are my HSA contributions allocated in my MyHSA account?
  8. Who has control over the money invested in a Health Savings Account?
  9. Do Health Savings Account funds roll over year after year and get invested?
  10. Can anyone make catch-up contributions to a Health Savings Account?
  11. Can my spouse and I have a joint HSA, like our regular checking account?
  12. What can distributions from the HSA be used for?
  13. Are dental and vision care qualified medical expenses under a Health Savings Account?
  14. What happens to the money in a Health Savings Account after you hit age 65?
  15. What happens to my HSA when I die?
  16. Can I roll over or transfer funds from my IRA to my HSA?
  17. What tax forms will I receive to include with my annual tax filings?


General Questions


What is a Health Savings Account (“HSA”)?

An HSA, or Health Savings Account, is a tax-favored savings account used to pay for qualified medical expenses of the account holder, the account holder’s spouse and any eligible dependents tax free. An HSA is not a Use-It-Or-Lose-It type of account it is a Use-It-Or-Keep-It account. The money not spent in an HSA account by the end of the year stays in the HSA account and the account holder continues to have access to those funds to pay for future qualified medical expenses tax free. With an HSA, over time account holders have the opportunity to accumulate large balances that they can take with them into retirement to use to pay for their retiree medical expenses tax free.

An HSA is an individually owned account, it can never be a “joint account”. However the HSA account holder can use the money in their account to pay for their own qualified medical expenses and the qualified medical expenses of their spouse and any eligible dependents tax free. In order to open and contribute to an HSA you must meet the following requirements:

  1. You must be enrolled in an HSA Qualified Health Plan. Sometimes referred to as an HDHP High Deductible Health Plan.
  2. You cannot be enrolled in any Nonqualified Health Insurance including any benefits you may get through a spouse’s employer such as:
    • A Medical Flexible Spending Account (FSA) that is not limited to dental and vision expenses.
    • A Health Reimbursement Arrangement (HRA) that pays first dollar benefits before you have met your deductible.
  3. You cannot be enrolled in Medicare. Being 65 or older and Medicare eligible is not a disqualification the disqualification is the actual enrolment in Medicare.
  4. You cannot be claimed as a dependent on someone else’s tax return.


Who is eligible for a Health Savings Account?

To be eligible for a Health Savings Account, an individual must be covered by an HSA Qualified Health Plan, and must not be covered by other health insurance (does not apply to specific injury insurance and accident, disability, dental care, vision care, long-term care) that is not HSA qualified, you can not be enrolled in Medicare, and you can’t be claimed as a dependent on someone else’s tax return.


What Is an “HSA Qualified Health Plan”?

2016 HSA Qualified Health Plan For calendar year 2016, an “HSA Qualifed Health Plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage or $13,100 for family coverage.

2017 HSA Qualified Health plan For calendar year 2017, an “HSA Qualified Health Plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage or $13,100 for family coverage.


Who can contribute to a Health Savings Account?

Contributions to HSAs can be made by either the employer or the individual, or both. If contributions are made by the individual, it is an “above-the-line” deduction. If contributions are made by the employer, it is not taxable to the employee (excluded from income). Contributions can also be made by others on behalf of an eligible individual and deducted by the MyHSA account holder. All contributions are aggregated.


How much can I contribute to a Health Savings Account?

2016 Annual contribution limitation For calendar year 2016, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,350. For calendar year 2016, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,750.

2017 Annual contribution limitation For calendar year 2017, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,400. For calendar year 2017, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,750.


How is money deposited to my HSA?

Money may be deposited to your HSA through payroll deduction, if your employer participates in such a program, or you may make deposits directly to your HSA account. Deposits may be made periodically or in a lump sum, but only up to the contribution limits set by the IRS.

Payroll deductions: If your employer offers the option through a Cafeteria Plan, you may specify a regular contribution to be deducted from your paycheck. This contribution will be made before Social Security, federal, and most state income taxes are deducted.

After-tax contributions: You may choose to make all or part of your annual account contributions to your HSA by making “after-tax” contributions to your HSA account. These contributions, which you can make by writing a personal check, may be deducted on your income tax return, using IRS Form 1040 and Form 8889.

Employers may make contributions to your HSA account as well; while you do not take a deduction for these contributions, they are excluded from your gross income.

Note: You will use IRS Form 1040 for your HSA contributions, not the short form 1040A or 1040EZ. This deduction is taken “above the line”: you do not need to itemize contributions on Schedule A in order to claim the deduction for HSA contributions.


How are my HSA contributions allocated in my MyHSA account?

The first $200 that you contribute to your MyHSA account will be held in cash we call this the “cash threshold”. All contributions above the cash threshold will automatically be invested in one or more of the investment options available.

  1. What if I make a contribution to my MyHSA account before I have made any investment elections how will that money be invested? If you deposit any funds into your MyHSA account before you have selected your investment options the additional funds above the cash threshold will default into the MetLife Guaranteed Fund. At anytime you can move funds between investment options and setup future contribution allocations.
  2. I have setup the investment options that I want my money invested in. If you have selected the investment(s) and the percentages that you want to be allocated to each fund then every time you make a contribution to your MyHSA account any dollars above the cash threshold will be allocated to those investments by the percentage that you setup. You can change your future allocation at any time. If you need help call our help desk at (800) 576-9472.

Who has control over the money invested in a Health Savings Account?

The HSA account holder has control over the assets in their account.


Do Health Savings Account funds roll over year after year and get invested?

Yes, the money invested in a Health Savings Account rolls over year after year.


Can anyone make catch-up contributions to a Health Savings Account?

Account holders who are 55 or older, who are also covered by a HDHP can make an additional catch-up contribution to their own account. The maximum “catch-up” contribution to an HSA is $1,000.


Can my spouse and I have a joint HSA, like our regular checking account?

No, only one person can be named the account owner of an HSA account. If both you and your spouse have HSA qualified health insurance, you could each have your own account.

If both you and your spouse have family coverage under an HSA qualified health plan, the maximum total tax-deductible HSA contribution both of you can make (including employer contributions) is the IRS limit for family coverage. This contribution can be divided between you and your spouse however you wish. If you and/or your spouse are eligible to make catch-up contributions, you may each contribute your eligible catch-up contribution to your own HSA account.


What can distributions from the HSA be used for?

Distributions from an HSA can be distributed for either qualified medical or other expenses. If the amount distributed is used for qualified medical expenses, then the distribution is tax free. If the amount distributed is used for other than qualified medical expenses, the amount distributed will be taxed and, for individuals who are not disabled or over age 65, subject to a 20% tax penalty.
HSA account holders can use the money in their HSA to pay for their own qualified medical expenses and the qualified medical expenses of their spouse and any eligible dependents tax free.

View a complete list here.


Are dental and vision care qualified medical expenses under a Health Savings Account?

Yes, as long as these are deductible under the current rules. For example, cosmetic procedures, like cosmetic dentistry, are generally not deductible and would not be considered qualified medical expenses.


What happens to the money in a Health Savings Account after you turn 65?

Once you turn 65, if you enroll in Medicare, the money in your HSA can be used for health expenses and to pay certain insurance premiums like Medicare Part A & B. It cannot be used to purchase a Medigap policy. It can also be used for any other qualified medical expenses. If used for qualified medical expenses, the amounts come out of the account tax free. If used for other expenses, the amount received will be taxable (however the tax penalty will no longer apply). If when you turn 65 you do not enroll in Medicare and are otherwise a qualified individual per section 223 of the Internal Revenue Code you may continue to contribute to your HSA account. At the point you elect to enroll in Medicare you can no longer contribute to your HSA.


What happens to my HSA when I die?

Your HSA is an inheritable account. What happens to your HSA when you die depends who you named as your beneficiary.

Spouse designated beneficiary. If your spouse is your designated beneficiary, the account will be treated as your spouse's HSA after your death. The account will continue to be tax-free for qualified medical distributions. If your spouse is covered by an HSA qualied health plan, contributions to the account may also be made tax-free, up to maximum annual contribution limits.

Other than Spouse designated beneficiary. If you designate someone other than your spouse as the beneficiary of your HSA:

  1. The account stops being an HSA on the date of your death.
  2. The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die.

Your estate is the beneficiary. If your estate is the beneficiary of your HSA, the value of your account is included on your final income tax return.

NO designated beneficiary on file. If you do not have a beneficiary on file, the funds are payable to the accountholders estate.


Can I roll over or transfer funds from my IRA to my HSA?

Yes. The government does allow a one-time transfer of funds from an IRA to an HSA. The transferred amount, when combined with other HSA contributions for the year, may not exceed your annual maximum contribution.

Be aware that if you do not remain covered by an HDHP for the 12 months following the IRA to HSA rollover, the transferred amount must be included in your income and is subject to a 10% tax penalty.


What tax forms will I receive to include with my annual tax filings?

Form 1099-SA (you will get in January) notifies the IRS of distributions made from your HSA during the tax year. Form 5498-SA (you will get in May because you have until April 15th of the current year to make a contribution for the previous year) notifies the IRS of contributions made to your HSA during the tax year. Alliance Benefit Group will send the appropriate year-end forms to you. The forms that you receive are informational only forms. We electronically upload the forms to the IRS.

About MyHSA

MyHSA is a different kind of HSA, it’s a better HSA. MyHSA is designed for the long term while making it easy for you to access your money to pay for medical expenses that you have today. (More)

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