The contribution limits for various tax advantaged accounts for the following year are usually announced in October, except for HSA, which come out in April. The 2018 HSA contribution limits will have small increases.
HSA Contribution Limits
Employer contributions are included in these limits.
Age 55 Catch Up Contribution
As in 401k and IRA contributions, you are allowed to contribute extra if you are above a certain age. If you are age 55 or older by the end of year, you can contribute additional $1,000 to your HSA. If you are married, and both of you are age 55, each of you can contribute additional $1,000.
However, because HSA is in an individual’s name — there is no joint HSA even when you have family coverage — only the person age 55 or older can contribute the additional $1,000 in his or her own name. If only the husband is 55 or older and the wife contributes the full family contribution limit to the HSA in her name, the husband has to open a separate account for the additional $1,000. If both husband and wife are age 55 or older, they must have two HSA accounts if they want to contribute the maximum. There’s no way to hit the maximum with only one account.
The $1,000 additional contribution limit is fixed by law. It’s not adjusted for inflation.
Two Plans Or Mid-Year Changes
The limits are more complicated if you are married and the two of you are on different health plans, or when your health insurance changes mid-year. The insurance change could be due to a job change, marriage or divorce, enrolling in Medicare, birth of a child, and so on.
For those situations, please read HSA Contribution Limit For Two Plans Or Mid-Year Changes.
You can only contribute to an HSA if you have a High Deductible Health Plan (HDHP).
The IRS also defines what qualifies as an HDHP. For 2017, an HDHP with individual coverage must have at least $1,300 in annual deductible and no more than $6,550 in annual out-of-pocket expenses. For family coverage, the numbers are minimum $2,600 in annual deductible and no more than $13,100 in annual out-of-pocket expenses. For 2018, an HDHP with individual coverage must have at least $1,350 in annual deductible and no more than $6,650 in annual out-of-pocket expenses. For family coverage, the numbers are minimum $2,700 in annual deductible and no more than $13,300 in annual out-of-pocket expenses.
However, just having the minimum deductible and the maximum out-of-pocket isn’t sufficient to make a plan qualify as an HDHP. The plan must also meet other criteria. See Not All High Deductible Plans Are HSA Eligible.
Best HSA Providers
If you get the HSA-eligible high deductible plan through an employer, your employer usually has a designated HSA provider for contributing via payroll deduction. It’s best to use that one because your contributions via payroll deduction are usually exempt from Social Security and Medicare taxes. If you want better investment options you can transfer or rollover the HSA money from your employer’s designated provider to a provider of your choice afterwards. See How To Rollover an HSA On Your Own and Avoid Trustee Transfer Fee.
If you are not going through an employer, or if you’d like to contribute on your own, you can also open an HSA with a provider of your choice. For the best HSA providers with low fees and good investment options, see Best HSA Provider for Investing HSA Money.
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