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Health Savings Account FAQ

You are not alone! We get lots of questions about the IRS requirements for Health Savings Accounts. We answered some of the most common below. Call us at 812-667-5101 or stop in to discuss in person with a real human being.  
A Health Savings Account (HSA) is a tax-exempt trust or custodial account established exclusively for the purpose of paying or reimbursing the qualified medical expenses of you, your spouse, and your dependents.
You are eligible to make or receive HSA regular contributions if you:
  • are covered under a high deductible health plan (HDHP) at the beginning of the month. You must have coverage on the 1st of the month to qualify for that month.
  • are not also covered by any other health plan that is not an HDHP (with certain exceptions for plans providing preventative care and limited types of permitted insurance and coverage.
  • are not enrolled in Medicare.
  • cannot be claimed as a dependent on another person's tax return.
A HDHP is a plan with a higher deductible than traditional insurance plans. The monthly premium is usually lower, but you pay more health care expenses out-of-pockets before the insurance company pays its share (your deductible). A HDHP can be combined with a HSA, allowing you to pay for qualified medical expenses with tax-free money. 
Yes. The HDHP must limit out-of-pocket expenses. The maximum out-of-pocket expenses, including money applied to your deductible and coinsurance for covered charges, are set annually. These amounts are subject to cost-of-living adjustments. 
The maximum annual contribution amount is a specified amount (subject to cost-of-living adjustments). This amount can change ever year. Please ask us about the contributions or visit the IRS website

Note that a "catch-up" contribution is available for eligible individuals age 55 or older by the end of their taxable year and are not enrolled in Medicare. 
It happens! Contact us at 812-667-5101 or stop in as soon as you notice and we can correct the error so that you avoid any federal tax penalties.