What is the maximum annual contribution that can be contributed to an HSA?
2020 Limits: $3,550/Single or $7,100/Family and $1,000 Catch-up (age 55+)
2021 Limits: $3,600/Single or $7,200/Family and $1,000 Catch-up (age 55+)
Is there a cap on how much the HSA can grow to in a lifetime?
There is no maximum accumulation limit for an HSA.
What is the maximum an individual can contribute to the HSA when the account is established mid-year?
If the individual remains HSA-eligible throughout the rest of that year and all of the following year, they can contribute the full annual maximum contribution for each year. However, if HSA eligibility is lost before December of the following year, the limit for both years is prorated by the number of months the individual was HSA-eligible.
How is the contribution limit determined if an individual becomes covered by Medicare, or otherwise loses HSA eligibility during the year?
The limit would be prorated based on the number of months the individual was HSA-eligible. If the individual is age 55 or older, the $1,000 catch-up contribution would also be prorated.
What if an individual contributes more than their allowed limit during the year?
As soon as excess contributions are discovered, they should be withdrawn from the HSA. If this is done before income taxes are filed, the excess contributions will be subject to income tax. However, if the error is discovered in subsequent years the contributions are subject to income taxes and an additional 6% excise penalty. Any earnings on excess contributions are also subject to tax.
Contact a tax professional for additional information or for assistance correcting excess HSA contributions.
Can an HSA be funded outside of payroll?
Yes, HSA owners can contact Alerus directly to arrange this. (Note that an HSA owner has until the sooner of April 15th or the date they file their personal income taxes to make contributions for the previous year. Contributions made outside of payroll will not include FICA savings tax.)