Not be claimed as a dependent on someone else’s tax return.Not have other health coverage (with some exceptions).Have an eligible HDHP on the first day of the month in which you make a contribution.You must meet the following requirements to be eligible to contribute to an HSA: Note that the catch-up contribution for eligible taxpayers age 55 and older has remained $1,000 throughout the same period. Here’s how the limit has changed over the past decade. The IRS typically raises the HSA contribution limit each year to account for inflation. 31 of the following year - to avoid paying income taxes and a 10% penalty on those contributions. If you are enrolled in an eligible HDHP as of Dec.1 of a given year, you may be able to contribute the maximum allowable amount.īut there’s an important caveat: You must remain enrolled in an eligible HDHP for one year - from Dec. Tip: Calculate your prorated contribution amount by counting the number of months you were enrolled in an eligible HDHP on the first of the month and dividing it by 12 and multiplying that number by the total amount you could have contributed had you been eligible for the entire year. You may be able to contribute only a portion of the allowable amount if you aren’t enrolled in an eligible HDHP for the entire year.
DEDUCTIBLE MEDICAL EXPENSES 2015 FULL
Contribution limits for those not covered for a full year
You can contribute an additional $1,000, regardless of whether you have a self-only or family plan, if you’re 55 or older. That limit increases to $7,750 if you have an eligible family plan. 2023 HSA contribution limitsįor the 2023 tax year, you can contribute up to $3,850 to an HSA if you have an eligible HDHP and are the only one on it. The 20% penalty is no longer applicable if you become disabled or reach age 65.
DEDUCTIBLE MEDICAL EXPENSES 2015 PLUS
Additionally, if you take withdrawals for ineligible expenses, you must pay taxes on the distributions plus a 20% penalty. If you make contributions to an HSA beyond what you’re allowed, the IRS charges a 6% excise tax for each year in which the excess contributions remain in the account. But you don’t have to maintain eligibility to take advantage of the tax benefits on contributions you made while you were eligible. To qualify for an HSA, you must have an eligible high-deductible health plan (HDHP).
For example, a cosmetic procedure may be eligible if it’s necessary to improve a deformity due to injury, disease or congenital abnormality. In some cases, the rules aren’t black and white. The IRS has a long list of qualified medical expenses, including:Įxpenses not associated with preventing or treating a disease or function of the body are not considered qualified medical expenses.Ĭommon exclusions from the list include nutritional supplements and weight loss programs not prescribed by a physician and aromatherapy. “With an HSA, people can both save for immediate health care expenses and invest the remainder of the funds to grow tax-free for future expenses,” says Sandy Gleason, vice president of industry consulting at Alegeus, a benefits administration provider. You can even use an HSA to supplement your traditional retirement savings. There’s also no deadline for when you need to use your funds. They aren’t deductible on your tax return but may be excluded from your gross income.Īnd unlike a flexible spending arrangement, your HSA stays with you if you leave your employer. Your employer can also make contributions to your HSA on your behalf. “Contributions are deductible, earnings grow tax-free, and there are no taxes due when the money is withdrawn to pay for medical expenses.” HSAs are “triple tax-free,” says Sallie Mullins Thompson, a CPA and tax strategist. They can also use some of the tax savings to offset their costs. A health savings account is a tax-advantaged account eligible taxpayers can use to save for medical expenses.
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