How HSA Contributions Work
Normally, you are permitted to contribute 1/12th of your annual maximum for each FULL month you are covered by the High Deductible Health Plan (HDHP). For example if you have single coverage and are covered for 6 of 12 months in the TAX year, you may contribute 6/12ths of the annual maximum of $3,050 (in 2011) or $1,525. Some people want to maximize their contribution for the tax year so they contribute more than is permitted under the 1/12th rule. If you contribute any amount in excess of the 1/12th rule in the tax year you subject yourself to what is known as the “Testing Period.”
The testing period requires you to maintain the HDHP though the entire month of December of the current tax year AND all 12 months of the following tax year. The type of HDHP coverage (single or family) an individual HSA on December 1 governs the amount that a employee is eligible to contribute for the year. For instance, if you are enrolled in individual coverage on December 1, 2011, you may contribute up to $3,050 or if you are enrolled in family coverage, you may contribute up to $6,150 to your HSA. If you fail to satisfy the testing period, the additional contributions made under this exception become taxable and subject to an additional 10% penalty tax.
We have included several questions and answers concerning HSA contributions here on our site. Click for the latest listing of HSA FAQs concerning contribution limits.
HSA Contribution Limits for 2011
The maximum contribution that can be made to an HSA for 2011 for individuals with single coverage is $3,050. The maximum HSA contribution for those with family coverage is $6,150.
Account holders age 55 or older may add $1,000 to the amounts above (each year) as their catch-up contribution.
The limit on out-of-pocket expenses, (including deductibles and co-pays), for single HDHP coverage is $5,950, and $11,900 for family HDHP coverage.
The minimum deductible of the high-deductible health insurance plan is $1,200 for single coverage and $2,400 for family coverage.
Note for Health Savings Administrators Account Holders
You or your employer can make contributions. If your employer contributes, that amount must be shown on your W-2, box 12. If you contribute through your Employer's pre-tax program, this will also appear on your W-2, box 12. If you contribute direct (not through your Employer), you deduct the contribution on your tax return.
Please feel free to comment here on our website or Contact us if you have questions.
The mailing address for sending your contributions (if you are not having them deducted from your paycheck) is:
Health Savings Administrators
10800 Midlothian Turnpike
Suite 240
Richmond, VA 23235
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Phone: 888-354-0697
Please make checks payable to Fulton Bank.
