Who Can Contribute to Your HSA?

Anyone can contribute to your HSA (you, your employer, your spouse, etc.). If your employer allows it, you can contribute to your HSA through pre-tax payroll withholding, so you don’t have to pay federal and state income taxes (in most states), as well as FICA tax.

If you don’t contribute through pre-tax payroll withholding, you can also make tax-deductible contributions to your HSA. If you choose this approach, you can deduct your HSA contribution amount on your tax return. You get the tax deduction for HSA contributions made by anyone except your employer, but you are responsible for FICA tax.

How Much Can You Contribute to Your HSA?

The IRS sets limits on the maximum that can be contributed to an HSA each year; these limits are the total amount you, your employer, and anyone else can contribute.

2020 Contribution Limits:
Individual: $3,550
Family: $7,100

Once you reach age 55, however, you’re allowed to contribute an extra $1,000 annually to your HSA.

When Can You Start Contributing to Your HSA?

To begin contributing to your HSA, you must be enrolled in a HSA-qualified health plan on the first day of that month. So if you enroll in a HSA-qualified health plan and HSA on May 15th, you’ll be able to contribute to your HSA starting June 1st.

You can contribute to your HSA until that year’s federal income tax deadline (generally around April 15th of the following year). And unlike a flexible spending account, you can change your contribution amount as often as your employer allows—not just during open enrollment or after a qualifying event. You can front-load, back-load, or stagger your HSA contributions as desired.

However, if you exceed the annual contribution limit and don’t remove the excess contributions by that year’s tax filing deadline, you’ll have to pay a penalty. As your HSA’s owner, you’re responsible for making sure you don’t exceed your annual contribution limit.

More About HSA Contributions

• Your contributions remain in your HSA until you use them (there’s no use-it-or-lose-it limit). And any interest or earnings grow tax-free and are tax-free when withdrawn for eligible medical expenses.
• You aren’t required to make equal HSA contributions throughout the year. You can front-load, back-load, or stagger your contributions if desired.
• If you have multiple funded HSAs, you can consolidate your funds into one HSA via a transfer or rollover. Learn more about HSA transfers and rollovers here.
• You can invest your contributions like a 401(k) or IRA and save for retirement medical expenses.
• If you lose HSA eligibility during the year, you must prorate your contributions for the months you were eligibility. To do that, divide the applicable maximum contribution limit by the number of months you were eligible (you’d also do this for the $1,000 catch-up contribution if you’re over 55).
• You can fix an excess contribution by withdrawing it from your account before the tax-filing deadline and making sure your HSA trustee codes it as an excess contribution reversal rather than a distribution. If you don’t reverse an excess contribution by that year’s tax filing deadline, however, you’ll have to pay ordinary income tax plus a 6% penalty on that excess amount each year it remains in your account.

Frequently asked questions