All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 2
Registered: ‎10-07-2017

HSA Contributions

I have an HSA that my employer was making contributions to starting in January of 2017.  I had lasik in August, but didn't have enough funds in my HSA to cover it, so paid with my credit card.  It's my understanding that you can reimburse yourself for qualified expenses paid out of pocket at any time (even years later) as long as your HSA was opened before the expenses occurred.  So my plan was to reimburse myself later in the year.  The lasik cost more than the annual contribution limit, so I was going to contribute the 2017 limit and then contribute more in 2018 and then reimburse myself for the total cost of the procedure.  But my employer changed health insurance in September and I no longer have a high deducible plan and am no longer eligible to contribute to an HSA.  So my question is: Can I still contribute to it up to the cost of the lasik since the expense occurred when I was eligible to contribute?  Or am I just out of luck because my employer picked a new health insurance plan?  Thanks!

Valued Neighbor
Posts: 74
Registered: ‎02-28-2016

Re: HSA Contributions

Your maximum HSA contribution for 2017 is limited to 2/3 of the annual limit (8 of 12 months with HDHP coverage) due to the insurance change starting in September. So, you will NOT be able to contribute the full amount as you had planned. The date of service does not extend your eligibility.
Tax Pro
Posts: 5,615
Registered: ‎02-23-2016

Re: HSA Contributions

Hi lasereyes,

 

 

Welcome to the H&R Block community.

 

You can contribute up to 2/3 of your normal limit since you had HDHP coverage until September.  This means that you can contribute a maximum of $2,211 if the plan is an individual plan.  You can contribute $4,475 if your plan is a family plan.  If you were eligible for the entire year your contribution limits would be $3,350 and $6,750.  The individual plan annual contribution limit increases to $3,400 for 2017.

 

Also note that for expenses that you paid out-of-pocket that your HSA funds did not cover you can take a deduction in the medical expenses section on Schedule A, so you're not totally out of luck.

 

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Pioneer
Posts: 2
Registered: ‎10-07-2017

Re: HSA Contributions

Well, that's a bummer!  But thank you both for the replies!

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Tax Pro
Posts: 5,615
Registered: ‎02-23-2016

Re: HSA Contributions

lasereyes,

 

 

You're quite welcome.

 

There may be a way that you can make this work by the way.  If you become eligible to contribute to an HSA by the 1st of December then you are eligible for the entire year (last month rule).  This means that you would be able to contribute the maximum allowed to your HSA if you are eligible again for the month of December.  Your HSA stays with you even if you leave your employer, so you just need to find a new high-deductible health plan and you'll be able to contribute more to it.

 

Note that if you become eligible for the entire year under the last month rule you must remain eligible to contribute for the entire 12-month period following the December in which you became eligible, starting that December and ending on December 31st of the following year.  If you lose eligibility before those first 12 months are up you will have to recapture your tax-free contributions as taxable income.

 

Also, if you find a high-deductible health plan outside of your employment and you contribute to it out-of-pocket then you can deduct the contributions you made out-of-pocket directly on your Form 1040 (be sure to report them on Form 8889 as well).

 

 

Louis