Health Savings Accounts
A health savings account (HSA) is a tax-exempt trust or
custodial account. You establish an HSA with a qualified HSA
trustee to pay or reimburse the medical expenses you incur.
Report contributions and distributions on Form 8889 and attach
it to your Form 1040.
Benefits
- You can claim a tax deduction on your 1040, even if you do not
itemize deductions.
- Contributions your employer makes can be excluded from your
gross income.
- Interest and other earnings on the account are tax-free.
- Distributions are tax-free if used to pay for qualified medical
expenses.
- Contributions remain in your account year after year until you
use them.
- HSA accounts stay with you, even if you change employers or
leave the workforce.
Qualifications
You must meet all of the following qualifications:
- You must have a high deductible health plan (HDHP).
- You must have no other health coverage.
- You must not be enrolled in Medicare.
- You cannot be claimed as a dependent of someone else.
Limits on Contributions
You or another qualified person can contribute to your HSA. The
limit on the amount of contributions depends on the type of HDHP
you have and your age.
If you are filing married filing jointly, you are treated as
having family coverage if you or your spouse has family
coverage.
If you are contributing to a self-only coverage HSA, you can
contribute up to the amount of your health plan deductible, but not
more than $3,100.
If you are contributing family coverage HSA, you can contribute
up to the amount of your health plan deductible, but not more than
$6,250.
If you are enrolled in Medicare you cannot contribute to your
HSA.
If you are age 55 or older, your contribution limit is increased
by $1,000. If you are married filing jointly and both you and
your spouse are over age 55 and are not enrolled in Medicare, the
total contribution limit is increased to $8,250.
You must reduce the amount that can be contributed to your HSA
by any contributions made to an Archer medical savings account.
This includes any contributions your employer makes on your
behalf.
Limits of Deduction
The deduction is limited based on whether the coverage is for an
individual or a family.
Self-Only Coverage
- Minimum annual deductible must be at least $1,200.
- Maximum out of pocket expenses is $6,050.
Family Coverage
- Minimum annual deductible must be at least $2,400.
- Maximum out of pocket expenses is $12,100.
Qualified Medical Expenses
Qualified medical expenses are the same expenses that qualify
for the medical and dental
deduction and are incurred by:
- You or your spouse
- All dependents that you are claiming
- Any person you could have claimed as a dependent except that:
- The person filed a joint return.
- The person had more than $3,800 in gross income.
- You could be claimed by someone else.
For more information, see IRS
Publication 969.