By: Deb Grace
If you were eligible in 2016 to make contributions to a Health Savings Account (H.S.A.) and you have not already made the maximum contribution for the year, you have until April 18, 2017 to make your contribution. Unlike other IRS deadlines, requesting an extension to file your federal income tax return does not extend the deadline for making your 2016 H.S.A. contribution.
An individual is eligible to make contributions to an H.S.A. if he or she is covered by an eligible high deductible health plan and is not covered by any other medical insurance, including Medicare. The maximum contribution for 2016 is $3,350 for an individual with single coverage for the full year, and $6,750 for family coverage for the full year. An eligible individual who is age 55 or older in 2016 may make an additional contribution of $1,000. If you have family coverage and both you and your spouse are age 55 or over, you each can make a $1,000 catch-up contribution, but each individual must make the catch-up contribution to his or her own H.S.A.
Eligible contributions to an H.S.A. are tax deductible when made, and tax-free when used to pay for medical expenses. You are not required to use your H.S.A to pay for current medical expenses, but instead may invest the funds to pay for future medical expenses. An H.S.A.’s investment gains are not taxed currently, and are never taxed if they are used to pay for qualified medical expenses.
Since everyone’s situation is different, you will want to discuss these rules with your tax advisor. If you are considering maximizing your 2016 H.S.A. contribution, you will want to act quickly, since your H.S.A. provider may require some advance processing time to ensure that your 2016 contribution is credited to your account by the April 18, 2017 deadline.
For more information, please contact Deb Grace in the Troy, MI office at 248-433-7217.