Contributions

An individual, an employer, or both can make contributions to an HSA. Employer contributions are not taxed to the employee. Contributions do not need to be made to an HSA every year. Contributions to an HSA can be made by check or electronic funds transfer.

How much can be contributed to an HSA?

The amount that can be contributed to an HSA is based on the IRS annual maximum contribution limits. You become eligible to contribute on the first of the month after your high deductible health plan coverage begins. If you enroll mid-month, you are not eligible until the first of the next month.

The annual contribution limits are:

  • For an individual plan, $3,050* in 2010 and $3,050* in 2011 can be contributed regardless of the deductible amount.
  • For a family plan, $6,150* in 2010 and $6,150* in 2011 can be contributed regardless of the deductible amount.
  • Married couples enrolled in family HDHPs with separate HSAs can contribute in aggregate up to $6,150* in 2010 and $6,150* in 2011

* These amounts are indexed yearly to changes in the Consumer Price Index.

If you establish your high deductible health plan after January 1 but before December 2 you may now also contribute the full annual amount to your HSA for that calendar year. To do so you must maintain your high deductible health plan coverage during a "testing period" that runs through December 31 of the following calendar year. Under all other circumstances or if the "testing period" is not met, 1/12th of the annual limit may be contributed for each month of coverage under a high-deductible health plan. Tax consequences and penalties will generally apply to contributions not meeting these rules.

The annual contribution limit is increased for individuals who have attained age 55 before the close of the taxable year. The additional catch up contribution amount is $1,000 in 2010, $1,000 in 2011.

What happens if contributions are made that exceed the annual limit?

Generally HSA account holders must pay a 6% excise tax on contributions made to an HSA that are greater than the annual limit. (See IRS Form 5329 to determine this tax.) If HSA account holders determine that an excess contribution has been made, they may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if:

  • Excess contributions are withdrawn by the due date, including extensions, of their tax return,
  • Any income earned on the contributions is withdrawn and included in "other income" on their tax return for the year, and
  • A deduction is not claimed on Form 1040 for the amount of the withdrawn contributions. If an employer made the contribution, the amount should be included in taxable income.

When making a withdrawal of excess contributions, HSA account holders must tell the custodian that the withdrawal is for that purpose. SelectAccount will compute the earnings on the excess contributions for the HSA account holder. The total withdrawal will include the earnings portion. The withdrawal for excess contributions, and the earnings, will be reported to the HSA account holder on IRS Form 1099-SA. Form 1099-SA is issued to the account holder by January 31 of each year.

Need More Information?

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You can login to make a one-time contribution, manage regular contribution amounts to your HSA, or manage your Basic Investment Account.

Call Us with Questions

For questions about the health savings account, please call (651) 662-5065 or toll free at 1-800-859-2144. We're at your service.