This month, I am discussing HSA guidelines rather than an ACA update. As more individuals gain individual rather than group coverage an understanding of the ins-and-outs of HSAs for those on high deductible health plans (HDHP) that are HSA-compatible becomes of greater importance.
HSAs are generally seen as a group benefit used on HSA-compatible plans as a pre-tax savings device for medical expenses. However, individuals can also have HSA-compatible plans and a growing number do. What they may not know is that they have the option to make HSA contributions post-tax and use an above-the-line deduction on their tax return thus lowering their adjusted gross income (AGI) and providing the same advantage as contributing pre-tax through an employer. Additionally others can make contributions to your HSA account, and the account holder (you) enjoys the tax savings.
HSA funds are used for qualified medical expenses and generally cannot be used for premium payments or non-prescription drugs. There are exceptions to this, and I strongly suggest you make use of the sources found at the bottom of this email or contact a legal advisor if you have questions regarding this.
The 2015 limit for self-only coverage is $3350; for family coverage it is $6650. Individuals 55 and over are allowed a catch-up contribution of $1000; if both you and your spouse are enrolled in an HSA compatible plan and over 55, you can contribute an additional $1000 each, bringing your total limit to $8650 for the year. Once an individual turns 65 and is eligible for Medicare, they are no longer allowed to contribute to an HSA. This limit includes any contributions your employer may make to your account. Employer contributions through a Section 125 plan are not tax deductible for you; however, the contributions are not federally taxable nor are they are subject to withholding from wages for tax purposes.
You cannot have a joint HSA account. If both you and your spouse are covered under an HSA compatible plan, you can have an HSA account in your name or your spouse’s name, or you and your spouse can each have an HSA account. The family maximum contribution can be split between your accounts in any manner; however, catch-up contributions must be made to the account matching the individual 55 or over. So if you turn 55 and your spouse is under 55, if you both have accounts, the $1000 catch-up contribution must be in your account. If you are both 55 or over, you must make your $1000 ($2000 total) catch-up contributions to separate accounts.
The minimum deductible for an HSA compatible plan is $1300 for an individual and $2600 for family coverage. The maximum out-of-pocket (OOP) is $6450 for an individual and $12900 for family coverage. Please note that not all plans that meet the minimum deductible and maximum OOP are HSA-compatible.
You cannot contribute to an HSA account if you can be claimed as a dependent on someone else’s tax return.
A few reminders for employers:
If you make contributions to employees’ HSA accounts, you must treat all full-time employees the same; offering the same dollar amount or percentage of deductible. However, you may treat full-time, part-time, and former employees differently.
If an employee is eligible for employer contributions to their HSA account and the account is in the spouse’s name, you can contribute to the spouse’s HSA account. However, this contribution would be taxable as part of the employee’s gross income.
This is not a comprehensive or exhaustive accounting of HSA information; I have tried to highlight the most common questions that I receive. Please note that I am not a tax advisor and this should not be taken as legal advice. If you are unsure of the particulars of HSA legalities or plan to take the advice herein, please speak with your legal or tax advisor.
As always, please let me know if you have any questions regarding the HSA Guidelines or the Affordable Care Act.
Account Manager, Employee Benefits
Phone: 800-287-3379 x 312