Frequently Asked Questions about HSAs
How much money can I deposit each year into my HSA?
The limit to how much money can be withdrawn tax-free from your paycheck and used for your HSA as of this writing is $3000 for individuals and $6,000 for families. The pre-tax issue is a little complicated – you can only have that amount of money withdrawn on a pre-tax basis if your employer is offering a high deductible insurance plan (ask your administrator if you are unclear). If not, you can still deduct your deposits to your Health Savings Account, but not until tax time.
Can my employer contribute to my HSA, or does it all have to come from me?
While the overall limit still applies, your employer can make some of the contribution. For example, some employers may find that their costs when using high deductible insurance plans go down so much that they can afford to pay into employees’ health savings account and still save money.
What are the differences between health savings accounts and flexible spending accounts?
The biggest difference between FSAs and HSAs is the ability to roll money over year after year. The “plan year” limitations of FSAs is a major complication for some, especially when it comes to FSAs for medical expenses. The other major difference is that Health Savings Accounts are portable – if you move jobs or even retire you can keep the balance in your health savings account.
Can I have both a FSA and HSA?
In most cases you cannot have both types of accounts (if the FSA is for medical expenses)
Under what circumstances can money be withdrawn from a health savings account for non-medical purposes?
If you are under 65 you can withdraw money from your HSA for any reason, but you will not only pay a 20% penalty, but you will also pay back the tax savings that were only meant for money saved for medical purposes. Once you turn 65 the penalty goes away, but you still have to pay back the tax savings.