End of Year HSA Tips & Reminders 

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Published December 31, 2018

 

Health Savings Accounts (HSAs) allow eligible individuals to put money aside tax-free to pay for out-ofpocket medical expenses, but HSAs work differently than other tax-advantaged accounts. Here are 10 helpful tips and reminders as the year comes to an end.

  1. HSA contributions for 2018 can be made up until the tax filing deadline, which is April 17, 2019.
  2. The maximum annual contribution to an HSA for 2018 is $3,450 for those covered by a singleonly qualified high deductible health plan (HDHP) and $6,900 for those covered by a family HDHP.
  3. There is also a catch-up contribution of $1,000 for people covered by an HDHP who are age 55 or older. If an HDHP covers two spouses who are both age 55 or older, a $1,000 catch-up contribution for each spouse can be made, but only if each spouse has established their own HSA.
  4. If covered by an HDHP for only a portion of the year, HSA contributions are pro-rated based on the number of full months covered under the HDHP. There is one exception. If a person becomes covered under an HDHP by December 1, 2018, and they anticipate being covered by the HDHP during all of 2019, the full annualized contribution can be made for 2018.
  5. HSA account holders will receive Form 1099-SA by January 31, 2019 from the trustee or custodian who maintains the HSA. This form will show the total amount of money that was withdrawn from the HSA in 2018. If any of the money was withdrawn for non-qualified medical expenses, this amount of money will need to be reported as income, subject to state and federal income taxes and a 20% penalty.
  6. HSA account holders will receive Form 5498-SA by May 31, 2019 from the trustee or custodian who maintains the HSA. This form will show the total contributions made for the 2018 tax year. Because HSA contributions for 2018 can be made up until April 17, 2019, account holders should not expect to receive Form 5498-SA prior to filing their taxes.
  7. Account holders should contact their HSA provider if they think they may have contributed more than their maximum limit for the year. Adjustments can usually be made to avoid penalties.
  8. Any amounts withdrawn from an HSA to pay for administrative or monthly fees are not taxable.
  9. If a person will no longer be covered by an HDHP in 2019, they will no longer be eligible to make contributions to the HSA. However, they can continue to use remaining funds tax-free for outof-pocket medical expenses.
  10. It’s up to the HSA account holder to maintain proof (e.g. receipts) that funds were withdrawn tax-free for qualified medical expenses. These may be needed if ever audited by the IRS.