Contributions and Distributions
Health Savings Accounts (HSAs)
- Contributions may be funded by an employer, employee, and any other individual on behalf of a qualified individual up to the annual maximum amount.
- 2014 annual HSA contribution limits are $3,300 for self-only coverage and $6,550 for family coverage.*
- In addition to the standard HSA annual contribution limits above, accountholders age 55 and older can make additional catch-up contributions. The maximum annual catch-up contribution is $1,000 for tax years 2009 and later. For married couples to each be eligible for the catch-up contribution, both individuals must have their own HSA.
- All contributions, including catch-up contributions, must be made by April 15 of the following tax year (e.g., all 2014 contributions must be made by April 15, 2015).
- Contributions must stop once an individual is enrolled in any type of Medicare program.
- The self-employed, partners, and S-Corporation shareholders are generally not considered employees and cannot receive an employer contribution — they can make deductible contributions to the HSA on their own.
- An HSA may be offered only with an HSA-qualified HDHP.
- Distributions are tax-free if taken for qualified medical expenses.
- Distributions used for nonqualified medical expenses are includable in taxable income and may be subject to a 20 percent penalty tax (20 percent penalty tax does not apply when distribution is taken after the account holder is age 65, dies or becomes disabled).
- Tax-free distributions can be taken for the qualified medical expenses of:
- a person covered by the HDHP;
- the spouse of the individual (even if not covered by the HDHP);
- any dependent of the individual (even if not covered by the HDHP).
- Expenses must be incurred after the HSA has been set up.
- Distributions do not have to occur at the same time as the medical expense.
- Distributions may be taken even if the individual is no longer eligible to contribute to an HSA.
- HSA funds may accumulate for use after retirement.
- The account holder is responsible for determining the eligibility of the expense and maintaining records.
- For a complete list of qualified eligible medical expenses, view IRS Publication 502: Medical and Dental Expenses.
- To learn more about Health Savings Accounts, please review IRS Publication 969: Health Savings Accounts.
* Maximum contribution amounts are updated each year based on a cost-of-living adjustment.