3 Factors To Consider When Setting Up An HSA

So you’ve done some research into an Health Savings Account and you’re looking into opening one up at Sentry Bank. While HSAs are excellent for a number of reasons, they do have challenges you should be ready to face. Here are three factors to consider when signing up for an HSA.

When you’re ready to set up an account, contact us today!

1. You’re In Charge

With an HSA, you’re completely in charge of what’s happening – your employer or HSA trustee (like Sentry Bank) can’t adjust or change anything without your approval.

You’re completely in charge of deciding:

  • who’s eligible to make contributions;
  • how much to contribute;
  • how your HSA funds are spent; and,
  • whether the distributions are taxable or nontaxable.

All of that responsibility may seem daunting, but it’s not against the law to provide HSA education. Employers and institutions (like Sentry Bank) are not required to help, but some may offer guidance, like on this blog, when it comes to learning how the account works. You just need to be the one making the decisions

2. Multiple Health Plans Can Be Confusing

If you or your spouse have family coverage, then both are treated as having family coverage – unless they do not cover each other and cover other dependents.

If a spouse has single-coverage under a high-deductible health plan (HDHP) and the other spouse has family coverage under a non-HDHP plan (covering dependents other than the spouse) then the one with the HDHP would be able to contribute to the HSA under the single-coverage rate.

If either spouse is 55+ years old, then their respective “catch-up” contributions must only be applied to their own account.

3. Not All Employer Contributions Are Tax Deductible

If you’ve already met your annual HSA contribution limit – $6,750 for a family and $3,400 for an individual in 2017 – then any excess deposits are included in your annual income and you have to pay taxes on them.

This also means that if by tax time you have an excess balance pending rollover, then you will incur the penalty tax.