Health Savings Accounts or HSAs as Described on IRS.gov, by James R. Wigen, CAM® ChFM® CPM® CWM®, Sr. Wealth Manager

 

What are the Benefits of an HSA?

 

You may enjoy several benefits from having an HSA.

  • You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you don’t itemize your deductions on Schedule A (Form 1040).
  • Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
  • The contributions remain in your account until you use them.
  • The interest or other earnings on the assets in the account are tax free.
  • An HSA is “portable.” It stays with you if you change employers or leave the workforce.

 

Qualifying for an HSA Contribution

 

To be an eligible individual and qualify for an HSA contribution, you must meet the following requirements.

  • You are covered under a high deductible health plan (HDHP), described later, on the first day of the month
  • You have no other health coverage except what is permitted under Other health coverage, later.
  • You aren’t enrolled in Medicare.
  • You can’t be claimed as a dependent on someone else’s 2021 tax return.

 

Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers).

 

If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse’s coverage doesn’t cover you.

Also, you may be an eligible individual even if you receive hospital care or medical services under any law administered by the Secretary of Veterans Affairs for a service-connected disability.

 

If another taxpayer is entitled to claim you as a dependent, you can’t claim a deduction for an HSA contribution. This is true even if the other person doesn’t receive an exemption deduction for you because the exemption amount is zero for tax years 2018 through 2025.

 

Each spouse who is an eligible individual who wants an HSA must open a separate HSA. You can’t have a joint HSA.

 

High Deductible Health Plan (HDHP) 

 

An HDHP has:

  • A higher annual deductible than typical health plans, 
  • A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. Out-of-pocket expenses include copayments and other amounts, but don’t include premiums.

An HDHP may provide preventive care benefits without a deductible or with a deductible less than the minimum annual deductible.  Preventive care includes, but isn’t limited to, the following.

  1. Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals.  Routine prenatal and well-child care.
  2. Child and adult immunizations.
  3. Tobacco cessation programs.
  4. Obesity weight-loss programs.
  5. Screening services. This includes screening services for the following.
    1. Cancer.
    2. Heart and vascular diseases.
    3. Infectious diseases.
    4. Mental health conditions.
    5. Substance abuse.
    6. Metabolic, nutritional, and endocrine conditions.
    7. Musculoskeletal disorders.
    8. Obstetric and gynecological conditions.
    9. Pediatric conditions.
    10. Vision and hearing disorder
      Contribution & Out-of-Pocket Limits
      for Health Savings Accounts & High-Deductible Health Plans – Contributions Are Pre-Tax
      2023 2022 Change
      HSA contribution limit (employer + employee) Self-only: $3,850 
      Family: $7,750      		 Self-only: $3,650
      Family: $7,300      		 Self-only: +$200
      Family: +$450
      HSA catch-up contributions (age 55 or older) $1,000 $1,000 No change
      (set by statute)
      HDHP minimum deductibles Self-only: $1,500
      Family: $3,000      		 Self-only: $1,400
      Family: $2,800      		 Self-only: +$100
      Family: +$200
      HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums) Self-only: $7,500
      Family: $15,000      		 Self-only: $7,050
      Family: $14,100      		 Self-only: +$450
      Family: +$900
      Source: IRS, Revenue Procedure 2022-24.

 

The information in this post has been taken directly off IRS.gov.

 

If you would like to discuss HSA accounts further, please email James.

 

This is for educational and informational purposes only and is not research or a recommendation regarding any security or investment strategy.

James CPM® designation was earned through Academy of Finance and Management or GAFM®

Investing involves serious risks and past performance is no guarantee of future performance or success.  This is not an offer to buy or sell securities and nothing contained herein should be interpreted as a recommendation regarding any investment or investment strategy.  Before making any decision to invest, first read the relevant disclosures and important information provided to you.

Please take the proper risk for your current situation and get the advice from a financial professional who clearly understands your current & future goals and objectives.

Investments are NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE   

All opinions expressed by James R. Wigen on this website are solely his opinions and do not reflect the opinions of IFP Advisors, LLC, dba Independent Financial Partners, (IFP).  Investment Advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Adviser. IFP and Independent Financial Management, LLC (IFM), are separate entities.

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