Tag Archives: 55+

2017 Max HSA Contribution Limits and HDHP Definitions

The IRS has performed their magical inflation calculations for 2017 and updated definitions for High Deductible Health Plan as well as the maximum contribution limit is for Health Savings Accounts (HSA’s). These changes affect who is qualified to open / contribute to an HSA and how much they can contribute.

2017 HDHP Limits

One prerequisite for opening or contributing to a Health Savings Account is that you are covered by HSA eligible insurance, otherwise known as a High Deductible Health Plan (HDHP). The IRS sets limits as to what constitutes an HDHP to define who is HSA eligible or not. Per IRS Rev. Proc 2016-28, for 2017, the IRS has defined a High Deductible Health Plan as:

…a health plan with an annual deductible that is not less than $1,300 for self only coverage or $2,600 for family coverage, and the out of pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage or $13,100 for family coverage.

So you need to have an annual deductible greater than $1,300 / $2,600 (self-only / family) to qualify for an HDHP, and thus, an HSA. In addition, your total out of pocket (OOP) expenses cannot exceed $6,550 / $13,100 (self-only, family) for the entire year. As you can see, the folks at the IRS have been hard at work as this represents no change in HDHP limits from 2016 to 2017. The following table compare HDHP limits for the past few years:

2014 2015 2016 2017
Self-Only Min Deductible $1,250 $1,300 $1,300 $1,300
Self-Only OOP Max $6,350 $6,450 $6,550 $6,550
Family Min Deductible $2,500 $2,600 $2,600 $2,600
Family OOP max $12,700 $12,900 $13,100 $13,100

2017 HSA Contribution Limits

The IRS also defines the maximum amounts that may be contributed to a Health Savings Account each year. That amount is updated based on inflation calculations and whatever else the IRS feels like for a given time period. Per IRS Rev. Proc 2016-28, the 2017 HSA contribution limits are:

…the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,400… the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $6,750.

So the cap or maximum contribution amount to your HSA is $3,400 for self-only coverage and $6,750 for family coverage. Note that this does not include the additional 55+ catch up contribution of $1,000 allowed to properly aged HSA holders. Thus, if you are over 55 on or before the end of 2017, you can contribute $4,400 for self-only coverage or $7,750 for family coverage.

As evidenced by the following chart, the IRS has made the slightest change in increasing the 2017 HSA contribution limit by $50 over 2016. You can see the history of HSA contribution limit increases for 2014, 2015, 2016, and now 2017 in the chart below:

2014 2015 2016 2017
Self-Only HSA Contribution Limit $3,300 $3,350 $3,350 $3,400
Family HSA Contribution Limit $6,550 $6,650 $6,750 $6,750
55+ Additional Contribution Limit +$1,000 +$1,000 +$1,000 +$1,000

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HSA Catch Up Contribution Limits for Age 55+

This question was submitted by HSA reader Theresa. Send yours in to evan@hsaedge.com

Help, just watched your video on form 8889. Line 3 baffles me. What is entered on line 3 if you are NOT under age 55?? My husband is over 55 and I am under 55. He is the policy holder of the HSA. So does that mean I leave line 3 blank? So confused!

Thanks for your email. This certainly is confusing as upon review, I had not observed the nuance in making 55+ contributions when filing Form 8889 for HSA’s. You will see that filing Form 8889 for 55+ contributions depends on your age / plan coverage / marital status, so I’ll go through it in detail.

Background

To account for higher medical costs, and as an incentive for older HSA participants to increase their total savings, the IRS allows an additional $1,000 to be deducted from your taxes if you are over age 55. There are a few important things to consider regarding eligibility for this “catch up” contribution:

  1. Must be 55 at the end of the tax year (12/31)
  2. Cannot be on Medicare (see below)
  3. Must be an eligible individual with HDHP insurance

This is backed up by the IRS tax rules for HSA’s, regarding additional 55+ contribution:

Additional contribution. If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000. For example, if you have self-only coverage, you can contribute up to $4,350 (the contribution limit for self-only coverage ($3,350) plus the additional contribution of $1,000).

HSA Contribution Limits for over 55

Thus, if you turn 55 during a year, you can contribute the entire $1000 to your HSA that year. Of course, if you are older than 55, you can also contribute that $1000 each year. In technical terms, this means that your HSA contribution limit is increased by that $1,000, so for 2016 this gives us a total of:

  • Single coverage – $4,350 = ($3350 + $1000)
  • Family coverage – $7,750 = ($6750 + $1000)

How 55+ Contributions are filed on Form 8889

There is actually a bit of nuance as to where the additional $1000 appears on HSA form 8889 when you file your taxes. Where this amount is taken into account strangely enough depends on your coverage type and if you are married. You can view this by viewing the Form 8889 Instructions and seeing how the flow chart works for Line 3. You will notice that if you are married on family coverage, you get diverted to Line 7. Here is how things break down:

  • If 55+, single coverage, and unmarried – the $1,000 gets added to your single contribution limit on Line 3
  • If 55+, family coverage, and unmarried – the $1,000 gets added to your family contribution limit on Line 3
  • If 55+, family coverage, and married – the $1,000 goes on Line 7. For Line 3, enter your contribution amount without the $1,000

So to answer the original question, it sounds like your husband is 55+ and you are < 55, and that he is the primary holder of family coverage on the HSA. As such, you fall into the 3rd example above, so make sure that Form 8889 Line 3 is your family contribution limit (2015: $6,650) and Line 7 reflects your catch up contribution (2015: $1,000)

65+ with HSA and enrolled in Medicare

However, Uncle Sam is not as kind to seniors who are using their HSA and enrolled in Medicare. In fact, they do not allow contribution to HSA’s while enrolled in Medicare. This is applied on a pro rata basis, so if you are on Medicare for part of the year your contribution limit is reduced by that “partial” amount (percentage) for the year. Back to the IRS rules:

Enrolled in Medicare. Beginning with the first month you are enrolled in Medicare, your contribution limit is zero.
For example: You turned age 65 in July 2015 and enrolled in Medicare. You had an HDHP with self-only coverage and are eligible for an additional contribution of $1,000. Your contribution limit is $2,175 ($4,350 × 6 ÷ 12)

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Note: if you have an HSA, please consider using my free service TrackHSA.com to manage your Health Savings Account. You can store purchases, receipts, and reimbursements securely online for free.

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