Maybe you already have a Health Savings Account (HSA). Maybe you’re considering one alongside a High Deductible Health Plan (HDHP) with open enrollment coming up soon*. Regardless of where you fall, it’s important to know ho much you’ll be able to contribute for the 2020 tax year.
Back on May 28, 2019, the IRS announced new, higher contribution limits for 2020 for both individuals and families. The amount that you can contribute depends on what type of insurance you are on during the calendar year. For example: if you are enrolled under a family plan, you can contribute the family maximum for that year. Here’s a quick look at what those limits are.
2020 HSA Contribution Limits
|HSA catch-up contributions (age 55+)||$1,000|
There is also some flexibility when it comes to making contributions for a particular year. Prior year contributions can be made up until the tax filing deadline, generally around April 15. This allows you a little extra time to fully contribute to your HSA if you hadn’t already done so. How nice!
Can you really have too much of a good thing? In the case of HSAs…yes!
If you happen to exceed your HSA contribution limit and fail to address it before filing your tax returns, the IRS can subject a 6% excise tax on the excess funds. This is especially important to keep in mind if you are married and you and your spouse each have your own HSA through your employers. Both of you will have to determine how much each of you can put into each account.
In the case that you do contribute too much, make sure to reach out to your financial institution for assistance.
For more on HSAs, check out our HSA information page.
*This material has been prepared for informational purposes only. You should consult your own tax, legal and accounting advisors for individual benefits.