insurance

How Much You Can Stash in a Health Savings Account

If you had an HSA-eligible health policy for only part of the year, special rules determine how much you can contribute to your HSA account.

I had a high-deductible health insurance policy for only part of the year. Does that mean I can’t contribute the max for the year to an HSA? What’s the deadline for my 2015 contribution?

You have until April 18, 2016 (the tax-filing deadline) to make your 2015 contribution. But because you had the HSA only part of the year, you may not be able to contribute the maximum amount ($3,350 for individual coverage or $6,650 for family coverage, plus an extra $1,000 if you’re 55 or older anytime in 2015).

The amount you can contribute depends on when you had the eligible coverage. For a policy to be eligible in 2015, it must have a deductible of at least $1,300 for single coverage or $2,600 for family coverage and meet a few other requirements (for example, the policy cannot have a separate deductible for prescription drugs). Your contributions will be pretax if they’re made through your employer or tax-deductible if you make them on your own.

If you had an HSA-eligible policy for only the first few months of the year, the size of your HSA contribution is based on the number of months you had the eligible coverage. If you had the policy from January through April, for example, you can contribute one-third of the full year’s contribution.

But there is a special rule if you had an HSA-eligible policy on December 1. In that case, you can make the full year’s contribution, even if you didn’t have an HSA-eligible policy for the entire year. Note, however, that you must continue to have an eligible policy for all of 2016 or you will have to pay taxes and a 10% penalty on the money you contributed for the months that you didn’t have the policy in 2015, says Stephen Neeleman, founder of HSA administrator HealthEquity. For more information about the last-month rule and the penalty calculation, see the Instructions for IRS Form 8889.

For more information about HSAs, see FAQs About Health Savings Accounts.

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