It’s Not too Late to Maximize Your 2015 HSA Contributions

One of the big benefits of being enrolled in a high-deductible health plan (HDHP) that is paired with a health savings account (HSA) is the ability to make pre-tax or tax deductible contributions that can grow, over time, free of federal taxes.  Every calendar year, the IRS sets the HSA annual maximum contribution limit.

The more money you contribute, the higher HSA balance you’ll have to use toward current or future out-of-pocket eligible healthcare expenditures.

You have longer than you think to save

Because you have a limit to the amount you can contribute each year, making the most of every tax-advantaged dollar that you are allowed to contribute is a smart move.

Many people think that once December 31, 2015 has passed, they can no longer contribute toward their 2015 annual limit. For those looking to squeeze as much money from their budget into their HSA as they can, this could mean coming short of the amount they planned to set aside for future or unexpected eligible healthcare expenses.

I’m happy to tell you that you actually have until April 18, 2016 - the deadline for filing taxes - to make tax deductible contributions for the 2015 calendar year.

Why contribute after 2015?

• Maximizing your 2015 HSA contribution limit allows you to save tax-advantaged dollars even after the calendar year has ended.
• Even if you discontinue participation in an HSA-qualified high deductible health plan (HDHP) in 2016, you can still use the funds attributable to your 2015 contributions for eligible expenses in 2016 and beyond.
• HSAs can also serve as a retirement account with awesome tax advantages, as outlined in our previous post on HSA fun facts.

So, how does this work?

Making 2015 HSA contributions after 2015 has ended is a bit different than making them during the calendar year through an employer’s payroll deduction. Since your company cannot process HSA payroll deductions for a prior tax year, contributions you make between January 1 and April 18, 2016 will need to be sent directly to your HSA bank or administrator.

You can do this through either a personal check or electronic bank transfer. When you do this, you need to make it very clear on the check, deposit slip or online notes that the contribution is for 2015. Otherwise, the bank or administrator may assume it is a deposit toward your 2016 contribution.

Make sure you get your tax break

Now, you want to make sure to get that tax break for the direct contribution. When you file your 2015 taxes, any 2015 contributions you made directly to your HSA outside of employer payroll contributions can be subtracted from your taxable income as an “above-the-line” deduction.  Any payroll deductions during the prior year will be reflected on your employer-issued W-2 form. You will only take an above-the-line deduction if you made a contribution outside of your employer’s payroll. Please consult a professional tax consultant or accountant for direction on how to report your 2015 HSA contributions.

 2015 HSA annual contribution limits

• Single coverage (meaning you are the only person covered on your medical plan): $3,350.
• Family coverage (meaning you also cover a spouse and/or dependents on your medical plan): $6,650.
• If you are age 55 or older, you may make an additional $1,000 annual contribution for the year (both single and family coverage).
• These maximums include any contributions made by you and your employer.
• Your annual contribution limit may be lower if you were not enrolled in an HDHP for the entire 2015 calendar year. Please consult with your tax advisor.

If you have questions about HSA rules and regulations, TriNet advises you to contact the bank or administrator that holds your HSA funds, your tax professional or refer to the IRS website for additional details.