Contributing to an HSA

HSA contributions

An employee typically makes contributions to their Health Savings Account (HSA) through pre-tax payroll deductions. They will select an annual contribution amount during open enrollment. That money will be divided by the number of pay periods in the calendar year to determine the amount HSA contribution amount per paycheck. For example, if you elect a contribution of $2,600 dollars and the number of paychecks you receive annually is 26, you will see a deduction of $100 dollars per paycheck. Amounts withdrawn from the employee’s paycheck are deposited into their HSA account.

Some employers also make additional Health Savings Account contributions for their employees. These employer contributions may be deposited in full, at the beginning of the year, or made periodically throughout the year.

          
            Contribute pre-tax dollars to your HSA
          
        
Health Savings Accounts (HSA) offer a triple-tax-advantage and lower premiums! An HSA allows you to set aside pre-tax dollars to pay for qualified medical expenses. If you are a participant in a high-deductible health plan (HDHP), you are eligible to take advantage of these tax savings:
Money contributed is tax-free
Interest and investment earnings are tax-free
Withdrawal of money is tax-free when made for eligible health care expenses
Since it is a savings account, you are encouraged to save more money than you spend. Funds roll over, earning interest along the way. The account is portable making it an ideal savings vehicle for you to carry with you into retirement. Enroll in an HSA for the security of your health now all the way through your golden years. Whether you withdraw the money tomorrow, five years from now, or in retirement, funds used for qualified health care expenses are always income tax free.

Annual HSA contribution limits

There are certain HSA contribution limits set by the IRS when it comes to contributing funds to your HSA. A person enrolled in an Employee-only plan may contribute up to $3,650 annually and a person enrolled in a family plan can fund up to $7,300 annually for 2022 (those limits will increase to $3,850 and $7,750 in 2023). People who are age 55 or older by the end of their plan term are allowed catch up contributions up to an additional $1000 of funds annually to their HSA. It is important to keep track of the money you contributed during the year, so you do not go over your annual limit. In a case where you have contributed too much to your HSA, you have until the tax deadline (generally April 15) of the following year to correct the error.

Keep in mind that your HSA is owned by you, so if you don’t spend the money you contributed on qualified medical expenses throughout the year, you will still have that money in your account in the following year. At the start of the new plan term, you have the option to continue contributing up to your HSA contribution limit. With the ability to save money that will rollover yearly and the option to invest your account funds, an HSA is a great retirement tool!

Your Lane Health Advance^¹ line of credit limit will not exceed your IRS contribution limit.

HSA employer contribution

While employers are under no obligation to fund money to their employees’ HSAs, many employers find that contributing to employees’ HSA accounts may help improve adoption of High Deductible Health Plans and HSAs, especially if they are transitioning from a more traditional type of health coverage.

Employer that decide to fund their employees’ HSA can elect to fully fund the amount through a one time annual contribution or periodic contributions throughout the year.

Employers may make pre tax contributions to their employee’s HSAs if they have a cafeteria plan in place that provides for HSA contributions. This money is not subject to withholding from wages for income tax.

HSA contribution rules

Aside from contribution limits, HSAs have some contribution rules to follow.

Anyone can contribute to your HSA if they chose to, most commonly, the owner of the HSA and the owner’s employer.
There is no contribution minimum, and the owner of an HSA does not need to make contributions. With most HSAs, you can only pay medical bills with money you’ve contributed and saved. With Lane Health’s Advance line of credit, you can pay bills with pre-tax dollars, with 12 months to repay your Advances from the time they are incurred.
You may contribute to your HSA via check. However, while you can still receive an income tax deduction when you file your taxes, you will not receive any reduction in payroll taxes. Thus, we recommend that you contribute to your HSA through deductions from your payroll. You can change the amount at any time.