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High Deductible Health Plan and Health Savings Accounts (HSA)



This information has been taken directly from the Health Equity website. 

What are the HSA contribution limits for 2023?

The Internal Revenue Service (IRS) has established the HSA contribution limits for 2023:

• Individual coverage: $3,850

• Family coverage: $7,750

• Catch-up contributions (age 55+): Additional $1,000

If a married couple will both be 55 or older, both spouses can make catch-up contributions totaling $2,000 collectively. Each spouse must have an individual HSA to make their individual catch-up contribution. If one spouse has a family HSA plan, then only the individual spouse who is 55+ and is the owner of the account can make the $1,000 catch-up contribution.

What are the HSA qualifications?

The IRS has eligibility requirements determining who can open and contribute to an HSA. You may be eligible to contribute to an HSA if:

• You have a high-deductible health plan (HDHP) with an annual deductible of at least $1,500 for individual coverage and $3,000 for family coverage

• Your high-deductible health plan out-of-pocket limits do not exceed $7,500 for individual coverage or $15,000 for family coverage

• You are not covered by Medicare

• You are not covered by any other impermissible coverage such as a spouse’s health Flexible Spending Account (FSA) or a Health Reimbursement Arrangement (HRA) provided by your employer

• You cannot be claimed as a dependent on another person’s tax return

Where do I find HSA qualified medical expenses?

Find HSA qualified medical expenses with this HealthEquity tool. It’s an easy way to discover coverage of medical expenses. Plus, you can find details on health benefits coverage and whether letters of medical necessity are needed.

How does HSA spending and contributions work with regards to retirement?

Your HSA funds can be used to pay for your qualified medical expenses in retirement. Your HSA distributions for qualified medical expenses are tax-free at any time.

HSA funds can also be used to pay for Medicare Part B, Part D, and Medicare Advantage premiums, if you are 65 or older.

An HSA does not require the account holder to begin distributing funds at a certain age. If you spend HSA money on non-qualified medical expenses after 65, you will need to pay income tax on those funds. If you spend the HSA money on anything other than qualified medical expenses before you are 65, you will need to pay income tax on those funds as well as a potential 20% tax penalty. After age 65, if you distribute funds for any purpose other than qualified medical expenses, you will be subject to income taxes. Funds distributed for qualified medical expenses will remain tax-free.

How can I contribute to my HSA if I’m eligible for Medicare but still working and covered by an HSA-qualified health plan?

If you delay your enrollment in Medicare, you can continue to make contributions past the age of 65, as long as you are still covered by an HSA-qualified HDHP. In addition, you can continue to make $1,000 yearly catch-up contributions starting at age 55.

Please note: If you decide to delay enrolling in Medicare, make sure to stop contributing to your HSA at least six months before you plan to enroll in Medicare. The reason is that when you enroll in Medicare Part A, you may receive up to six months of retroactive coverage, not going back farther than your initial month of eligibility. If you do not stop HSA contributions at least six months before Medicare enrollment, you may incur a tax penalty. Consult a tax professional for counseling about Medicare and HSAs.

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