FAQs - Frequently Asked Questions
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High Deductible Health Plans Taxes Eligibility Contributions Distributions Employers Administration
General Questions - [ back to top ]
Question: What is an HSA? Question: How does an eligible individual establish an HSA? Question: What are the fees for an individual HSA?
Question: What is an HSA?
Question: How does an eligible individual establish an HSA?
Question: What are the fees for an individual HSA?
High Deductible Health Plans - [ back to top ]
Question: What is a "high-deductible health plan"? Question: An individual and his family have a family health plan. The plan has a $5000 family deductible and provides payment for covered medical expenses if any member of the family has incurred covered medical expenses during the year in excess of $2000. Is this considered a qualified high deductible health plan? Question: What is family HDHP coverage under section 223? Question: Is an eligible individual and his dependent child that are covered under an "employee plus one" HDHP offered by the employer considered family HDHP coverage? Question: If eligible individual changes coverage during the plan year from self-only HDHP coverage to family HDHP coverage, does the individual (or any other person covered under the family coverage) fail to be covered by an HDHP merely because the family HDHP coverage takes into account expenses incurred while the individual had self-only coverage?
Taxes - [ back to top ]
Question: What is the tax treatment of an eligible individual's HSA contributions? Question: What is the tax treatment of contributions made by a family member on behalf of an eligible individual? Question: What is the tax treatment of employer contributions to an employee's HSA? Question: What is the tax treatment of contributions through a cafeteria plan to an employee's HSA? Question: What is the tax treatment of an HSA? Question: How are distributions from an HSA taxed after the account beneficiary is no longer an eligible individual? Question: What are the income tax consequences after the HSA account beneficiary's death?
Eligibility - [ back to top ]
Question: Who is eligible to have an HSA? Question: What kind of other health coverage makes an individual ineligible for an HSA? Question: What other kinds of health coverage may an individual maintain without losing eligibility for an HSA? Question: Does an individual need earned income in order to be eligible for contributions to an HSA? Question: May an otherwise eligible individual who is eligible for Medicare, but not enrolled in Medicare Part A or Part B, contribute to an HSA? Question: May an otherwise eligible individual who is covered by both an HDHP and also by insurance contracts for one or more specific diseases or illnesses, such as cancer, diabetes, asthma or congestive heart failure, contribute to an HSA if the insurance provides benefits before the deductible of the HDHP is satisfied? Question: Does coverage under an Employee Assistance Program (EAP), disease management program, or wellness program make an individual ineligible to contribute to an HSA? Question: If an employee begins HDHP coverage mid-month, when does the employee become an eligible individual? (For example, coverage under the HDHP begins on the first day of a biweekly payroll period.) Question: Can a spouse or dependent have any other insurance other than another qualified HDHP without causing the account holder to be ineligible to contribute to an HSA?
Question: Who is eligible to have an HSA? Question: What kind of other health coverage makes an individual ineligible for an HSA? Question: What other kinds of health coverage may an individual maintain without losing eligibility for an HSA? Question: Does an individual need earned income in order to be eligible for contributions to an HSA? Question: May an otherwise eligible individual who is eligible for Medicare, but not enrolled in Medicare Part A or Part B, contribute to an HSA? Question: May an otherwise eligible individual who is covered by both an HDHP and also by insurance contracts for one or more specific diseases or illnesses, such as cancer, diabetes, asthma or congestive heart failure, contribute to an HSA if the insurance provides benefits before the deductible of the HDHP is satisfied? Question: Does coverage under an Employee Assistance Program (EAP), disease management program, or wellness program make an individual ineligible to contribute to an HSA? Question: If an employee begins HDHP coverage mid-month, when does the employee become an eligible individual? (For example, coverage under the HDHP begins on the first day of a biweekly payroll period.)
Question: Can a spouse or dependent have any other insurance other than another qualified HDHP without causing the account holder to be ineligible to contribute to an HSA?
Contributions - [ back to top ]
Question: An employee and their spouse are both over 55 but under 65, covered by the same HDHP, file a joint return and have one HSA. Can they both contribute the maximum catch-up contributions? Question: Who may contribute to an HSA? Question: How are HSA contributions calculated? Question: What are the "catch-up contributions" for individuals age 55 or older? Question: If one or both spouses have family coverage, how is the contribution limit computed? Question: In what form must contributions be made to an HSA? Question: When may HSA contributions be made? Question: Is there a deadline for contributions to an HSA for a taxable year? Question: What happens when HSA contributions exceed the maximum amount that may be deducted or excluded from gross income in a taxable year? Question: Are rollovers subject to the annual contribution limits? Question: H and W are married. H is 35 and W is 33. H and W each have a self-only HDHP. H has a $1000 deductible under his HDHP and W has a $1500 deductible under her HDHP. How much can each contribute to an HSA? Question: How may spouses agree to divide the annual HSA contribution limit between themselves? Question: What is the contribution limit for an eligible individual covered by a HDHP and also by a post-deductible health reimbursement arrangement (HRA)? Question: May an individual who has not made excess HSA contributions treat a distribution from an HSA other than for qualified medical expenses as the withdrawal of excess HSA contributions? Question: Does an employer's contribution to an employee's HSA affect the computation of the earned income credit (EIC)?
Question: An employee and their spouse are both over 55 but under 65, covered by the same HDHP, file a joint return and have one HSA. Can they both contribute the maximum catch-up contributions? Question: Who may contribute to an HSA? Question: How are HSA contributions calculated? Question: What are the "catch-up contributions" for individuals age 55 or older? Question: If one or both spouses have family coverage, how is the contribution limit computed? Question: In what form must contributions be made to an HSA? Question: When may HSA contributions be made? Question: Is there a deadline for contributions to an HSA for a taxable year?
Question: What happens when HSA contributions exceed the maximum amount that may be deducted or excluded from gross income in a taxable year? Question: Are rollovers subject to the annual contribution limits? Question: H and W are married. H is 35 and W is 33. H and W each have a self-only HDHP. H has a $1000 deductible under his HDHP and W has a $1500 deductible under her HDHP. How much can each contribute to an HSA? Question: How may spouses agree to divide the annual HSA contribution limit between themselves? Question: What is the contribution limit for an eligible individual covered by a HDHP and also by a post-deductible health reimbursement arrangement (HRA)? Question: May an individual who has not made excess HSA contributions treat a distribution from an HSA other than for qualified medical expenses as the withdrawal of excess HSA contributions? Question: Does an employer's contribution to an employee's HSA affect the computation of the earned income credit (EIC)?
Distributions - [ back to top ]
Question: When is an individual permitted to receive distributions from an HSA? Question: How are distributions from an HSA taxed? Question: What are the "qualified medical expenses" that are eligible for tax-free distributions? Question: Are health insurance premiums qualified medical expenses? Question: Does a preventive care service or screening that also includes the treatment of a related condition during that procedure come within the safe harbor for preventive care in Notice 2004-23? Question: To what extent do drugs or medications come within the safe-harbor for preventive care services under section 223(c)(2)(C)? Question: If an account beneficiary's spouse or dependents are covered under a non-HDHP, are distributions from an HSA to pay their qualified medical expenses excluded from the account beneficiary's gross income? Question: Does an account beneficiary receive an HSA distribution as the result of a mistake of fact due to reasonable cause? Question: If both spouses have HSAs and one spouse uses distributions from his or her HSA to pay or reimburse the qualified medical expenses of the other spouse, are the distributions excluded from the account beneficiary's gross income? Question: When must a distribution from an HSA be taken to pay or reimburse, on a tax-free basis, qualified medical expenses incurred in the current year? Question: Are distributions from an HSA for long-term care services qualified medical expenses which are excluded from income? Question: May a retiree who is age 65 or older receive tax-free distributions from an HSA to pay the retiree's contribution to an employer's self-insured retiree health coverage? Question: If a retiree who is enrolled in Medicare receives a distribution from an HSA to reimburse the retiree's Medicare premiums, is the reimbursement a qualified medical expense?
Question: When is an individual permitted to receive distributions from an HSA? Question: How are distributions from an HSA taxed? Question: What are the "qualified medical expenses" that are eligible for tax-free distributions? Question: Are health insurance premiums qualified medical expenses?
Question: Does a preventive care service or screening that also includes the treatment of a related condition during that procedure come within the safe harbor for preventive care in Notice 2004-23? Question: To what extent do drugs or medications come within the safe-harbor for preventive care services under section 223(c)(2)(C)? Question: If an account beneficiary's spouse or dependents are covered under a non-HDHP, are distributions from an HSA to pay their qualified medical expenses excluded from the account beneficiary's gross income?
Question: Does an account beneficiary receive an HSA distribution as the result of a mistake of fact due to reasonable cause? Question: If both spouses have HSAs and one spouse uses distributions from his or her HSA to pay or reimburse the qualified medical expenses of the other spouse, are the distributions excluded from the account beneficiary's gross income? Question: When must a distribution from an HSA be taken to pay or reimburse, on a tax-free basis, qualified medical expenses incurred in the current year?
Question: Are distributions from an HSA for long-term care services qualified medical expenses which are excluded from income? Question: May a retiree who is age 65 or older receive tax-free distributions from an HSA to pay the retiree's contribution to an employer's self-insured retiree health coverage? Question: If a retiree who is enrolled in Medicare receives a distribution from an HSA to reimburse the retiree's Medicare premiums, is the reimbursement a qualified medical expense?
Employers - [ back to top ]
Question: If an employer contributes a lump sum for every employee on the first of the year and an employee terminates before the end of the year, is the employer responsible to calculate the excess and report it as taxable income? Question: Must employers who make contributions to an employee's HSA determine whether HSA distributions are used exclusively for qualified medical expenses? Question: What discrimination rules apply to HSAs? Question: Are HSAs subject to COBRA continuation coverage under section 4980B? Question: If an employer offers an employee a choice between a low-deductible health plan and a high-deductible health plan (HDHP), and the employee selects coverage only under the HDHP, is the employee an eligible individual under section 223(c)(1)? Question: If an employer conditions contributions to an employee's HSA on an employee's participation in health assessments, disease management programs or wellness programs and makes the same contributions available to all employees who participate in the programs, do the contributions satisfy the comparability rules? Question: Must an employer make comparable contributions to all employees who are eligible individuals or only to those employees who are eligible individuals and are also covered by an HDHP provided by the employer? Question: If an employee requests that his or her employer deduct after-tax amounts from the employee's compensation and forward these amounts as employee contributions to the employee's HSA, do comparability rules apply to these amounts? Question: If an employee elects to make contributions to an HSA through the employer's cafeteria plan, may the employer contribute amounts to an employee's HSA to cover qualified medical expenses incurred by an employee that exceed the employee's current HSA balance? Question: Are employers who contribute to an employee's HSA responsible for determining whether the employee is an eligible individual and the employee's maximum annual contribution limit? Question: May the employer recoup any portion of the employer's contributions from an employee's HSA? Question: If an employer contributes to an employee's HSA, can the employer have the employee sign a waiver indicating that if the employee terminates employment after a contribution has been made, that the amount of the employer excess could be returned to the employer from the HSA administrator?
Question: If an employer contributes a lump sum for every employee on the first of the year and an employee terminates before the end of the year, is the employer responsible to calculate the excess and report it as taxable income? Question: Must employers who make contributions to an employee's HSA determine whether HSA distributions are used exclusively for qualified medical expenses? Question: What discrimination rules apply to HSAs? Question: Are HSAs subject to COBRA continuation coverage under section 4980B?
Question: If an employee requests that his or her employer deduct after-tax amounts from the employee's compensation and forward these amounts as employee contributions to the employee's HSA, do comparability rules apply to these amounts? Question: If an employee elects to make contributions to an HSA through the employer's cafeteria plan, may the employer contribute amounts to an employee's HSA to cover qualified medical expenses incurred by an employee that exceed the employee's current HSA balance? Question: Are employers who contribute to an employee's HSA responsible for determining whether the employee is an eligible individual and the employee's maximum annual contribution limit? Question: May the employer recoup any portion of the employer's contributions from an employee's HSA? Question: If an employer contributes to an employee's HSA, can the employer have the employee sign a waiver indicating that if the employee terminates employment after a contribution has been made, that the amount of the employer excess could be returned to the employer from the HSA administrator?
Administration - [ back to top ]
Question: Who is a qualified HSA trustee or custodian? Question: Must HSA trustees or custodians determine whether HSA distributions are used exclusively for qualified medical expenses? Question: Can HSAs be offered under a cafeteria plan? Question: May a husband and a wife have a joint HSA? Question: What are permissible investments for HSAs? Question: If administration and account maintenance fees (e.g., flat administrative fees) are withdrawn from the HSA, are the withdrawn amounts treated as taxable distributions to the account beneficiary? Question: Is the HSA trustee or custodian responsible for determining whether contributions to an HSA exceed the maximum annual contribution for a particular account beneficiary? Question: Is the trustee or custodian responsible for tracking the account beneficiary's age? Question: Must the trustee or custodian allow account beneficiaries to return mistaken distributions to the HSA? Question: May an HSA trust or custodial agreement restrict the account beneficiary's ability to rollover amounts from that HSA? Question: Are HSA trustees or custodians required to accept rollover contributions or trustee-to-trustee transfers? Question: May an HSA trust or custodial agreement restrict HSA distributions to pay or reimburse only the account beneficiary's qualified medical expenses? Question: May a trustee or custodian restrict the frequency or minimum amount of distributions from an HSA?
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