• The individual must be covered by a High Deductible Health Plan on the first day of month in which the contribution to an HSA is to be made.
    • The individual may not be covered by another health plan that is not a HDHP. Caution: Some “voluntary or fringe” benefit plans may cause HSA contributions to be disallowed
    • FSAs, HRAs and Spousal FSAs or HSAs preclude contributing to a HSA. Limited purpose and post deductible FSAs and HRAs are allowed.
    • Individuals covered by coverage provided by Tricare are not allowed to contribute to an HSA. Those covered by Veterans Administration health benefits in the last three months cannot have an HSA.
    • Individuals enrolled in Medicare Part A, B or D may not open an HSA.
    • The individual can not be claimed as a dependent on someone else’s tax return.
    • Testing Period: An individual is allowed to make the full annual contribution to the HSA account in the year he/she enrolls in a HDHP. However, if enrollment incurs in any month other than January, a Testing Period applies. The Testing Period is the period beginning with the last month of the taxable year and ending on the 12th month following such month. If an individual makes deductible contribution under this provision and does not remain eligible individual during the testing period, the contribution made for the months preceding the month the individual became eligible are included in income and a 10% tax applies.

Contributions - 2012

Maximum Contribution: $ 3,100

Maximum Contribution: $6,250
Contribution maximum applies to contributions from all sources (employer, employee or family members)

Catch Up Provision: Individuals 55 and older may make an additional $1000 annual contribution. Spouses making this additional contribution must open a second spousal account.

Contributions may be made in one or more payments. Contributions must be made no later than the due date for filing the eligible individual’s federal income tax return, generally April 15th. Contributions may not be made before the first day of the tax year to which they apply.

Rollovers: One time rollover from IRAs: A one time rollover from an IRA, Traditional or Roth) in a direct trustee-to-trustee transfer is permitted. These amounts are not includable in income and are not subject to the 20% penalty. The rollover amount is limited to the maximum deductible HSA contribution for an individual or family.

FSA/HRA rollovers are also allowed. They must not exceed an amount equal to the lesser of (1) the balance in the health FSA or HRA as of September 2006 or (2)the balance in the health FSA or HRA as o the date of distribution. The distribution is not includible in income (or carry other penalties) and does not count against the maximum tax deductible contribution that can be made to the HSA.


Eligible Medical Expenses (Paul Form 2) after the HSA has been set up

    • Expenses incurred to diagnose, cure, mitigate, treat, prevent disease, or to affect the structure or function of the body to the extent they are not reimbursed by insurance. Expenses are those listed in IRC Section 213(d). Over the counter prescriptions are no longer eligible unless prescribed by a doctor.
    • COBRA Premiums and healthcare coverage while receiving unemployment benefits
    • Insurance premiums at age 65
      • Premiums for Medicare Part A and/or B, Medicare Advantage and the employee share of premiums for employer sponsored health insurance plans, including retire plan. Medicare Supplements (Medigap) are not eligible.
    • Long Term Care Insurance premiums – as per Revenue Code 213(d)(10)
    • Reimburse yourself for the above expenses that you paid with other funds, after the HSA has been opened
    • Use future contributions to pay for current expenses

Distribution Facts

    • Non-eligible Expenses will be subject to a 20% penalty and income tax
    • Loss of qualified HDHP money can continue to be used for qualified expenses even though further contributions may be made to the HSA.
    • Death or the account owner
      • Funds pass to a named beneficiary.
      • If spouse – the account becomes the HSA of the surviving spouse, subject to normal rules.
      • If non-spousal beneficiary – that account ceases to be an HSA at date of death and the value at date of death is includable in taxable of income of the beneficiary.
    • Money in the account can be used for the unreimbursed Qualified Medical Expenses of spouses and dependents.