Before You Contribute to an HSA, Check Eligibility First
A Health Savings Account can be a helpful tax tool, but you have to be eligible before you contribute.
One of the biggest misunderstandings is that any health plan with a high deductible qualifies. For HSA purposes, you generally must be covered by an HSA-eligible high-deductible health plan, often called an HDHP. If you are not sure whether your plan qualifies, check with your health insurance provider before making contributions.
Eligibility can also be affected by other coverage. In general, you cannot contribute to an HSA if you have disqualifying other health coverage, are enrolled in Medicare, or can be claimed as someone else’s dependent.
Medicare is an important detail to watch. Once you are enrolled in Medicare, you can no longer make HSA contributions for the months covered by Medicare. In some cases, Medicare enrollment may include a lookback period, which can reduce the number of months you were eligible to make HSA contributions for the year.
This matters because HSA contributions are not just based on whether the account exists. They are based on whether you were eligible to contribute during the year.
If you are changing health plans, nearing Medicare, or unsure whether your coverage qualifies, it is a good idea to confirm eligibility before contributing.
Each month, I share a clear, bite-sized tax insight straight from my continuing education so you can stay informed without sifting through tax changes.
Next month, we discuss how much you can put into an HSA.
Thanks for reading,
Brandy Sparkman, EA
I’ll keep learning so you can stay focused on what you do best.
See you next month for another Tax Minute.
