The HSA is a special tax-exempt savings account that lets you save money on a pre-tax basis that you can use for eligible health care expenses now and/or in the future. You may contribute to your HSA using pre-tax dollars through payroll deduction. To contribute to a HSA you must be enrolled in the Consumer Driven Health Plan (CDHP). You can use the money in the HSA to pay for all eligible out-of-pocket medical expenses. You can only contribute a certain amount to your HSA each year, but all contributions roll over from year to year. The HSA contribution limits for 2023 are $3,850 for self-only coverage and $7,750 for family coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution.
To contribute to an HSA, you must meet the following criteria:
- You must be enrolled in a High-Deductible Health Plan as defined by the IRS; the CDHP with an HSA is qualified as a High-Deductible Health Plan.
- You cannot be covered under any other medical plan.
- Neither you nor your spouse can have a Health Care Flexible Spending Account (FSA) in 2023 to pay for medical expenses.
- You may not contribute to the HSA once you attain age 65 if you enroll in Medicare Part A.
Medicare and Health Savings Accounts
- If you are enrolled in Medicare, you cannot be enrolled in a Health Savings Account, and you can no longer contribute to the HSA. However, you may continue to invest your money and be reimbursed for qualified expenses.
- If you delay your enrollment in Medicare, you may continue to make contributions to your HSA past the age of 65 as long as you are still covered by a qualified High-Deductible Health Plan with Health Savings Account. In addition, you are eligible to make an additional $1,000 in yearly HSA catch-up contributions.
- If you enroll in SSI (the income portion of Social Security), this automatically enrolls you in Medicare Part A and you would not be eligible to contribute to your HSA.
NOTE: In Alabama, California and New Jersey, state income taxes may apply to your Health Savings Account (HSA) contributions. For more information, consult your personal tax advisor.