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Can You Have Multiple Health Savings Accounts (HSAs)?

Managing one or more Health Savings Accounts can seem complicated. Laura answers a listener question about what do to when you end up with more than one HSA. Find out how these special accounts save money, the rules for using them, who can have one, and where to open one up.

By
Laura Adams, MBA
9-minute read
Episode #472
health savings plan

 

How Much Can You Contribute to a Health Savings Account (HSA)?

The IRS sets limits on the total amount you can contribute to an HSA each year. There’s also a “catch up” policy that allows you to contribute an extra $1,000 when you're age 55 or older with either an individual or a family policy.

Here are the maximum HSA contribution limits for 2016:

  • Individual (self-only) plans – allow up to $3,350 or up to $4,350 if you’re 55 or older. 
  • Family plans – allow up to $6,750 or up to $7,750 if you’re 55 or older.

In 2017 the contribution limit goes up slightly to $3,400 for individual plans, but there’s no change for family plans.

Who Can Have a Health Savings Account (HSA)?

All these HSA benefits sound great, but in order to qualify there’s a catch: You must first be enrolled in a high deductible health plan.

All these HSA benefits sound great, but in order to qualify there’s a catch: You must first be enrolled in a high deductible health plan.

These plans are just like regular health insurance policies, except that they have higher deductibles. That means you have to pay more out of pocket before your benefits begin.

Insurance deductibles and premiums always work like a see-saw. The higher your deductible, the lower your premium. Because you're responsible for more of your medical expenses, a high deductible plan typically costs less than a regular plan.   

For 2016 and 2017, a policy deductible must be at least $1,300, or $2,600 for family coverage in order to be considered a high deductible health plan

See also: HSA Rules After Leaving a High Deductible Health Plan

How to Open Up and Contribute to a Health Savings Account (HSA)

If you qualify for an HSA, they're available at many banks, credit unions, brokerages, and specialty institutions like HSAbank.com. Most are convenient to use and offer paper checks, a debit card, and online banking.

You can make contributions at any time, even up to April 15 for the previous tax year. But you’re never required to make any contributions to an HSA.

There’s a unique way to fund your HSA for the first time, using money you’ve already saved in a traditional IRA. You can do a tax-free rollover from your IRA into an HSA once in your lifetime, up to the annual contribution limit. The trustee of your IRA simply transfers the funds to the trustee of your new HSA. That’s how I opened my first HSA many years ago.

Contributions to an HSA can come from you, someone else, or an employer. Some company benefits include regular deposits into an HSA, such as $150 a quarter. It’s similar to workplace matching funds for a 401k or 403b retirement plan because they’re not included in your taxable income.

However, unlike a 401k where employer matching allows you to exceed the annual limit, that’s not the case with an HSA. The amount you, another person, or your company contributes can never exceed the limits I previously mentioned, so you have to monitor it throughout the year.

See also: 7 Ways to Save on Healthcare and Fitness

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlersbook is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.