hsa-rules1Based on the recent election, health savings accounts (HSA) are likely here to stay.  While there may be changes, including the possibility of having an HSA without enrollment in a qualified high deductible health plan, currently there are rules that must be followed to avoid taxes and penalties.  Let’s review some of the rules that cause the most issues and/or confusion.

  1. If you contribute to an HSA, your spouse cannot participate in a Flexible Spending Account (FSA) that includes medical. It must be limited to dental and vision.
  2. While you can cover your dependent children on your health plan to age 26, you can only use your HSA to pay for or reimburse expenses for your tax dependents. A separate HSA account can be opened by a dependent who is not your tax dependent, and they can contribute up to the family contribution limit.
  3. If you want to continue to contribute to your HSA and accept contributions from your employer, you cannot enroll in Medicare, not even Part A. Make sure that your plan is considered creditable coverage for Medicare Part D, so you won’t be penalized later.
  4. As long as the HSA account was open on the date of a qualified expense, you can reimburse yourself later as additional money is put into your account.
  5. You can spend HSA funds on your spouse and tax dependents, even if they are not enrolled in a qualified high deductible health plan. The maximum amount that you can contribute into the HSA each year is determined by whether or not you cover other family members on the plan.
  6. If your employer contributes to your HSA, that amount counts toward the annual contribution limit.
  7. If you cease to be enrolled in a qualified plan or become ineligible to make additional HSA contributions for another reason, you can still use the money in your HSA to pay for or reimburse eligible expenses. You will not lose the funds in your HSA.

It is important to understand the HSA rules and communicate them clearly to employees, as well as monitor changes that may occur over the next few years.  If you have questions or concerns, reach out to a consultant at HCW for assistance. You can also visit here for more information.

Ellen Tucker

Ellen Tucker

Area VP, Health & Welfare Consultant - Ellen’s expertise in the areas of underwriting, product development, financial analysis, provider relations, market research, strategic planning and benefit administration make her one of the most knowledgeable individuals in the healthcare industry today.
Ellen Tucker

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