Health Savings Account Must Know Facts

Tanya L. Burns, LUTCF, RHU, LTCP

Tanya L. Burns, LUTCF, RHU, LTCP

By Tanya L. Burns, LUTCF, RHU, LTCP
Tanya L. Burns and Associates, Inc.

Article submitted by Tanya L. Burns, LUTCF, RHU, LTCP, to share a health insurance update. If you’d like to submit an article, email Kelly Sawyer at cflmgma@gmail.com.

Did you know that no proration is needed when an employee turns age 55 mid-year?

IRS Publication 969 and FAQ guidance on the Department of Treasury’s website make it clear that the HSA annual catch-up contribution limit does not need to be prorated for the year in which an individual turns age 55 if he or she turns age 55 after January 1st. EXAMPLE: If Sue is an HSA-eligible individual for the entire year of 2017 and turns age 55 on December 31, 2017, she is able to make the full $1,000 catch-up contribution for 2017.

Did you know that Individuals who become covered by a Health Savings Account on December 1st are able to make a Full Contribution for the Entire Year (no proration).

IRS Publication 969 says that if you are covered by a Health Savings Account on the first day of the last month of your tax year (for most taxpayers this is December 1st), you are considered to be eligible for the Entire Year. This enables and individual to make the full contribution (either Individual or Family based on type of health coverage thru the High Deductible Plan) for that calendar year.

Did you know that Individuals who turn age 65 and are covered by a High Deductible Health Savings Insurance Plan are able to continue contributing to their Health Savings account?

In order to be eligible to continuing contributing to their Health Savings Account, they Must NOT Elect Medicare Part A or B. Election of Part A or B makes it Ineligible to contribute to a Health Savings Account.

Husband and wife over age 55 must have separate HSA accounts in order for each to deposit the $1,000 catch-up contribution, otherwise only one catch-up contribution can be made.

If a spouse is enrolled in Medicare but is continuing to be covered by their Employer Health Savings High Deductible Health Plan in order to cover other family members cannot contribute to their own health savings account. However, other the other eligible dependent can open a Separate HSA Bank Account and fund the entire family limit (plus catch-up) and Both Spouses can use these funds.

Individuals have until the tax filing deadline to add funds to the prior year’s deposits to maximize the allowable contributions for the prior year (consult with your tax advisor, accountant or CPA).

IRS Form 5498-SA is used for reporting HSA contributions and IRS Form 1099-SA is used to report HSA distributions.

2017 Contribution Limits: Individual: $3400, Family: $6750. Catch-up Limit for those Age 55 or older: $1,000.

 

2017-02-08T18:34:41+00:00