HSA Contribution question

[Vottomatic]

Hey guys, this may be a stupid question, but I'm kind of a newb when it comes to my HSA, and my employer doesn't seem to have any answers either. As of right now, I'm contributing a certain amount monthly, that comes out of my paycheck pre-tax. So I have no deductions for my HSA on my tax return, since that money is already going in untaxed. However, if I have had some recent medical expenses and need to contribute to the account manually, that money gets reported on next year's tax return as a deduction, correct? So if I add $1,000 straight from my checking account, I'll have a $1,000 deduction on my return? Thanks in advance for the help!

 

If it matters, we use HSA Bank for the account.

[jfoxcpacfp]

You have it correct. If you have a family HSA account, up to $6,750 in annual contributions can be added to the account (additional $1,000 if age 55+). So, if you are contributing $100/week and your employer is not contributing and you are under age 55, you can write a check for up to $1,550 to the account and pay the bill for your medical expenses from the HSA. Your contribution will be an "above the line" deduction on page 1 of your 2016 Form 1040.

[Jim]

Johanna, I have a similar question.  I'm taking a new job that has a high-deductible medical plan ($4000).  The employer pays half of that by depositing $2000 into an HSA bank account on my behalf.  So what amount am I then eligible to deposit? $6750, or $4750?

[jfoxcpacfp]

Jim wrote:

Johanna, I have a similar question.  I’m taking a new job that has a high-deductible medical plan ($4000).  The employer pays half of that by depositing $2000 into an HSA bank account on my behalf.  So what amount am I then eligible to deposit? $6750, or $4750?

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If if is a family plan and you are under age 55, you can deposit $4,750. $6,750 is the max from all sources.

[Jim]

That's what I suspected; thanks for the clarification.

[OBGYNguy]

Pretty sure this question has been asked a thousand times but I couldn't find it so my apologies. Do you have to have an HSA qualifying health insurance plan for the full year or does part of the year count? I just received an HSA qualifying plan in July and want to know if I can throw the whole 6750 in there or can only do half...

[RogueDadMD]

OBGYNguy wrote:

Pretty sure this question has been asked a thousand times but I couldn’t find it so my apologies. Do you have to have an HSA qualifying health insurance plan for the full year or does part of the year count? I just received an HSA qualifying plan in July and want to know if I can throw the whole 6750 in there or can only do half…

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You can throw in the entire amount.

[YSH]

jfoxcpacfp wrote:

You have it correct. If you have a family HSA account, up to $6,750 in annual contributions can be added to the account (additional $1,000 if age 55+). So, if you are contributing $100/week and your employer is not contributing and you are under age 55, you can write a check for up to $1,550 to the account and pay the bill for your medical expenses from the HSA. Your contribution will be an “above the line” deduction on page 1 of your 2016 Form 1040.

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Does it matter if you don't end up using that additional post allocation 1,550 amount for that year? I am in a similar situation and wondering if it is worth it to do it since its already mid October and most likely will just meet my deducible amount just in time for the new year to start.   Next year, I plan to be maxing out the $6,750. Thanks.

 

[jfoxcpacfp]

YSH wrote:

jfoxcpacfp wrote:

You have it correct. If you have a family HSA account, up to $6,750 in annual contributions can be added to the account (additional $1,000 if age 55+). So, if you are contributing $100/week and your employer is not contributing and you are under age 55, you can write a check for up to $1,550 to the account and pay the bill for your medical expenses from the HSA. Your contribution will be an “above the line” deduction on page 1 of your 2016 Form 1040.

Click to expand…

Does it matter if you don’t end up using that additional post allocation 1,550 amount for that year? I am in a similar situation and wondering if it is worth it to do it since its already mid October and most likely will just meet my deducible amount just in time for the new year to start.   Next year, I plan to be maxing out the $6,750. Thanks.

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The beauty of an HSA is that you don't have to ever use the amount you deposit. You can leave it to your spouse or your children when you die. It is like a TIRA on the front end (deductible) with the growth of a Roth (not taxed) and at withdrawal (tax free when you take the $$ out if used for qualified medical expenses. You can pay current qualified medical expenses or unreimbursed expenses from 30 years ago.

iow, yes, put the money in and get your deduction.

[spiritrider]

PEMDoc wrote:

OBGYNguy wrote:

Pretty sure this question has been asked a thousand times but I couldn’t find it so my apologies. Do you have to have an HSA qualifying health insurance plan for the full year or does part of the year count? I just received an HSA qualifying plan in July and want to know if I can throw the whole 6750 in there or can only do half…

Click to expand…

You can throw in the entire amount.

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This is based on the "last month rule". If you are an eligible individual on 12/1 of a given year, you can contribute the full maximum contribution. However, you are then subject to the "testing period" which is until 12/31 of the following year.

Normally you are eligible only for a pro-rated contribution limit for the number of months of eligibility, but if you are eligible on 12/1/2015, you can make the full 2015 contribution. However, if you become ineligible before 12/31/2016, the extra six months is subject to a 10% penalty.

This may not be as bad as it seems, even if it does happen. If your W-2 box 5 < $118.5K, then you saved the 7.65% FICA on the HSA contribution, resulting in really only a 2.35% penalty. It is usually a good risk unless you are pretty sure you will fail the testing period.

[Sunshine98]

Hello,

 

I want to make sure I am understanding this as well.  I want to open an HSA.  My employer does offer one, but I want to open one separately (as I don't know how long I will be at my current job).  iI I choose the HRA plan I have a deductible of $1750 and Annual Out of Pocket of $6850.  With these limits can I still open an HSA?  I also plan on contributing the max amount as a one time contribution.

[jfoxcpacfp]

Sunshine98 wrote:

I want to make sure I am understanding this as well.  I want to open an HSA.  My employer does offer one, but I want to open one separately (as I don’t know how long I will be at my current job).  iI I choose the HRA plan I have a deductible of $1750 and Annual Out of Pocket of $6850.  With these limits can I still open an HSA?  I also plan on contributing the max amount as a one time contribution.

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It's not as simple as meeting the deductible and OOP requirements. You should have your insurance provider or HR department verify that it is an HSA-qualified plan. If so, make sure you are not passing up any employer contributions by opening a separate account. You can still open a separate account, but get the maximum from your employer and then contribute the difference to the other account.

[alloykat]

My employer offers a HRA plan where the out of pocket annual maximum is 6K and the employer contributes $1400 towards that 6K. The deductible is $2200. There is also a HSA plan with a out of pocket maximum of 8K and employer contributes $1400 toward that. The monthly premium is slightly cheaper for the HSA. Would you select the HSA plan if you were planning to definitely reach the out of pocket maximum due to a pregnancy/delivery or just use the HRA? My question is basically are there instances where a HRA plan would make more sense than HSA plan?

 

[jfoxcpacfp]

Just to clarify, are you saying that the employer will reimburse only $1,400 and the rest of the OOP is on you? If so, the net result is that you w/b OOP an extra $2k with the HSA but (assuming you fill the HSA space) you'll save taxes at your marginal tax bracket multiplied by your contribution of $5,350. Assuming you are at the top bracket (rounded to 40%), that's $2,140 + whatever state and local taxes you save - and you'll have $6,750 in your HSA but nothing to show for it in the HRA. Of course, you'll have to come up with enough to both fund the HSA and pay the medical bills, assuming that's possible. Didn't count the difference in premiums for each plan since they are negligible.

Does that sound right? I'm kind of running through all this in my head.

[alloykat]

Johanna,

 

That is correct. Employer only contributes $1400 and it is use it or lose it. The rest of the OOP is on me. Basically, it is always in one's best interest tax wise to do a HSA correct?