Can I Rollover Health Savings Account (HSA) Funds to Following Year to Cover Deductable?
For 2008, I am enrolled in Kaiser HSA $1,500 deductable.
Scenerio 1:
I will contribute $1,500 in my HSA account for 2008.
Assuming I do not have any medical cost or doctor visit in 2008, can I use this $1,500 unused HSA fund to cover the deductable the following year in 2009?
Scenerio 2:
Assuming I do not have any medical cost or doctor visit in 2008. What if I do not contribute any funds to HSA in 2008? Meaning never opened an HSA account the entire year. Am I allowed to do nothing?
I ask this because since I can always reimburse myself for medical expenses, what is my hurry to open a HSA account?
To add what I found from treas.gov:
Can I use my HSA to pay for medical expenses incurred before I set up my account?
No. You cannot reimburse qualified medical expenses incurred before your account is established. We recommend you establish your account as soon as possible.
So that means if you are new to HSA, you need to sign up for an HSA account ASAP.
Matthew Rawl
Scenario #1. No problem. In fact this is the sales pitch of the HSA, no expeneses, roll it over, let it grow.
Scenario #2. Doable, but not necessarily a good idea. Yeah, you can do it, but if you don’t put in $1500 during 2008, you can’t go back and add to it in 2009. You just skipped the ability to un-tax that $1500.
Some people only fund the HSA to the extent they have expenses. (And yes, as long as the HSA was established before the expenses were incurred, this works.) Literally they wait until 1/1/2009, tally up the expenses, fund the HSA and then reimburse themselves. All expenses are now pre-tax (up to the limit), but no money is left over.
Other people–me–try to use the HSA as a secondary IRA-type slush fund. My HSA is through work, so I am forced to fund it by $720 a year. I am allowed to add another $780 a year at my discretion. I’m hoping my expenses stay where they’ve been for the past few years and I’m kicking myself that I didn’t do the HSA sooner…I’d have $5000 in there already!
As I get closer to retirement and the pre-medicare gap I’m realizing how much money I’ll need for medical.
Do not confuse the HSA with an FSA. The HSA rolls over; the FSA is forfeited to the employer. Any year with a contribution you have info on the form 8889; any year with a distribution you fill out a different section of the form. No adds and no subtracts, then no forms.
V B’s answer is 100% accurate!!!
I believe that you will lose any money you put in a HSA at the end of the year. Please check that out with the account itself. It depends on the requirements of the company writing the policy. Check the fine print. Make some calls to your HSA company.
Greetings,
The simple answer is yes!
You might be thinking of a Flex spending account. In that case, you use it or lose it. But a HSA, what you put in, you get to spend, rollover from year to year and/or retire with.
Regarding your Scenario #1. Your $1,500 Kaiser HSA sounds like it got a $1,500 medical deductible. This is not the amount that you can put into a Health Savings Account. The total amount that you can put into a HSA bank account is $5,800 per family or $2,900 per self only. There is nothing stopping you from either funding the account to the max or not funding it at all.
Me, personally, I contribute the max allowed by law. There are several reasons that this works for me.
First thing, I Can! I have enough money coming in right now to fund it. (This has not always been the case – trust me!)
Second, the money is pre-tax. (I deduct the amount at the end of the year on tax forms.)
Third, as the years roll on, the money grows. You can invest it and earn interest.
Forth, if I never need all the money, I can spend the money at 65 and beyond – like a IRA investment.
Finally, the best thing about a HSA, should I get new employment at a large company that has traditional medical insurance, the co-pay’s and other things that affect people what work with me will not effect me at all as the money can be used from the HSA!
Hope that helps…
Jeff
Seattle, WA