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Your 7-Step HSA Checklist For 2020

Your 7-Step HSA Checklist For 2020


With 2020 right around the corner, folks are hard at work putting together New Year’s resolutions: eating better, getting to the gym, reading more books. But amidst all the 2020 planning, don’t forget to give your HSA a quick once-over. This handy checklist will help you make sure you’re getting the most out of your HSA in the new year:


Are you satisfied with your 2019 contributions?

Remember, you can make contributions to your HSA for 2019 until April 15th, 2020. If you didn’t contribute what you’d hoped to in 2019, you still have 3 more months to put in additional funds.


Are you contributing enough to get your employer’s match?

Turning down free money is typically not the best idea. If your employer offers a match, make sure you’re putting in enough to take advantage of it!


Are you maximizing your HSA contributions in 2020?

For 2020, the HSA contribution limits went up $50 for individuals under self-only health coverage and $100 for individuals under family health coverage, bringing the HSA contribution limits up to $3,550 and $7,100, respectively. If you’re contributing to your HSA via payroll withholding, remember to bump up your deductions for the new contribution limits.


Will you turn 55 this year and become eligible for a catch-up contribution?

HSA accountholders who are 55 or older are eligible for an additional $1,000 annual catch-up contribution. If you’re 55 or older, you have a wonderful opportunity to put a little extra money into your HSA each year as you get closer to retirement.


Will you enroll in Medicare this year?

Once you enroll in Medicare, you aren’t eligible to contribute to your HSA anymore. And if you enroll in Medicare mid-year, you must prorate your HSA contributions based on how many months you were eligible. If you don’t, you could end up with excess contributions that can be a headache to get straight.

Also, if you delay your Medicare enrollment past your 65th birthday, your coverage when you do enroll will be retroactive to either your 65th birthday or 6 months before your enrollment date, whichever is smaller. If you’re planning on delaying your Medicare enrollment, you’ll want to stop contributing to your HSA either when you turn 65 or 6 months before you enroll, so you don’t end up with any excess contributions.


Do you have any funds in your cash account you could invest?

If you have extra dollars in your cash account that you haven’t spent, investing them is a wise move. You’ll likely earn much more return by putting those funds on the stock market than just having them sit in a low-interest cash account. And if you end up needing to withdraw those funds, you can move them back to your cash account.


Are your medical receipts shoeboxed?

If you paid for a qualified medical expense out of pocket, there’s no time limit on when you need to reimburse yourself from your HSA. In fact, by paying for years of healthcare costs out of pocket, you can let your investment HSA grow, then reimburse yourself tax-free for those expenses and use those reimbursed funds however you choose. But to do that, you need to keep records of your expenses in case you’re audited by the IRS. Find a trusty shoebox or app to keep your receipts safe in one place.


By working through these steps, you can give your HSA a quick tune-up and ensure you’re maximizing its potential. Looking for more HSA pro tips? Download our Ultimate Guide to HSAs and become an HSA expert in 20 minutes.

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How to Transfer or Roll Over Your HSA Accounts

How to Transfer or Roll Over Your HSA Accounts

If you have multiple funded health savings accounts (HSAs), consolidating your funds into one HSA can save you time and money. To do this, you can either transfer or roll over your funds.

In general, transfers are the simpler and easier way to move money between HSAs. Rollovers require tax reporting and can subject you to tax penalties if you don’t deposit your funds within 60 days.

How Do Transfers Work?

• Transfers are a direct custodian-to-custodian movement of money from one of your HSAs to another (you must be the owner of both HSAs). In a transfer, you never take possession of the funds transferred.

• You can do an unlimited number of HSA transfers within any given tax year, and transfers require no tax reporting by you or by your custodian.

• You can make a one-time transfer from your IRA or Roth IRA into your HSA, but you can’t transfer any other retirement account into your HSA. However, you can roll 401(k) funds into an IRA, then transfer that IRA over to your HSA.

• Transfers only count against your annual contribution limit if you transfer an IRA or Roth IRA.

How Do Rollovers Work?

• In a rollover, your custodian sends a check or automated clearing house transfer (ACH) to you, and you then deposit that check into a second HSA (you must own both HSAs).

• You must deposit the funds within 60 days of receiving them. If you don’t, the rollover is considered a distribution, and you’ll have to include it as taxable income and pay an additional 20% penalty on it.

• If you don’t deposit your rollover funds in time but have HSA-eligible expenses you paid for out of pocket and haven’t reimbursed, you can apply those unreimbursed expenses to lessen your financial burden. For example, if you roll over $1,000 and don’t deposit it in 60 days but have $600 in unreimbursed eligible expenses, you only need to report the difference of $400 ($1000 – $600) as taxable income. That way, you’d only pay a penalty of $80 (20% of $400).

• Rollovers never count against your annual contribution limit but must be reported on your tax return.

• Once you complete a rollover (when the custodian of your second HSA has received the funds), you can’t do another for a one-year period starting on the date the first rollover was completed.


If you’d like to transfer or roll over your funds to HealthSavings from another HSA provider, click the box below to get our transfer form.

After submitting the form, please allow 4-6 weeks for your transfer request to be completed, as it may take several weeks for your original financial institution to release the funds and/or settle any outstanding debits.

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