The Internal Revenue Service (IRS) oversees the regulations that govern all Health Savings Accounts (HSAs) and the High Deductible Health Plans (HDHPs) that must be used in conjunction with HSAs. The following is a general overview of these regulatory requirements. Please consult your tax advisor and/or visit www.treasury.gov for more complete information.

Qualifying for an HSA
  • You must be covered by a “high deductible health plan” (HDHP).
  • You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not a HDHP. (Other types of insurance like specific injury insurance, dental care, vision care, or long-term care may be permitted; consult your tax advisor).
  • You cannot be enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else’s tax return.
General Features
  • Contributions to your HSA can be made by you, your employer (including self-employed), your family, or any combination of these, although total contributions cannot exceed the annual limits established by the IRS each year.
  • You may claim a tax deduction for contributions you, or someone other than your employer, make to your HSA. Or, if allowed by your employer, you may make pre-tax payroll contributions to your HSA.
  • Earnings on the assets in your HSA account are tax free.
  • Withdrawals from your HSA for qualified medical expenses are also tax free. 
  • Funds remain in your HSA account from year to year. There are no “use it or lose it” rules for HSAs. HSA accounts are also completely portable; you keep your HSA even if you change jobs, change medical coverage, become unemployed, change your marital status, etc.
What are Qualified Medical Expenses?
Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction as explained in IRS Publication 502, Medical and Dental Expenses. Note, over-the-counter medicines (other than insulin) may also qualify as expenses for HSA purposes if you have a written prescription for them.

IRS 2016-2017 HSA Limits

The Treasury Department and Internal Revenue Service have set the following limits for Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs) that must be used in conjunction with HSAs. Note, contributions to an HSA for 2016 may be made until April 18, 2017.

Maximum Annual HSA Contribution Levels
  • If you have self-only HDHP coverage you can contribute up to $3,400 for 2017 ($3,350 for 2016). 
  • If you have family HDHP coverage you can contribute up to $6,750 for 2017 ($6,750 for 2016).
  • Individuals age 55 and older may be able to contribute an additional $1,000 as a “catch-up” contribution.
HDHP Limits
Minimum Annual Deductible:
  • If you have self-only HDHP coverage, the minimum annual deductible is $1,300 for 2017 ($1,300 for 2016). 
  • If you have family HDHP coverage, the minimum annual deductible is $2,600 for 2017 ($2,600 for 2016).
Maximum Annual Out-of-pocket Expenses:
  • If you have self-only HDHP coverage, the maximum annual deductible and other out-of-pocket expenses (within the network, if applicable) is $6,550 for 2017 ($6,550 for 2016).
  • If you have family HDHP coverage, the maximum annual deductible and other out-of-pocket expenses (within the network, if applicable) is $13,100 for 2017 ($13,100 for 2016).
Please consult your tax advisor and/or visit www.treasury.gov for more complete information.