Merritt Personal Lines Manual: Contributions to a Health Savings Account

Any eligible individual can contribute to an HSA. For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year. For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. Family members or any other person may also make contributions on behalf of an eligible individual.

Contributions to an HSA must be made in cash. Contributions of stock or property are not allowed.

Limit on contributions. The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have and your age. For 2006, if you have self-only coverage, you can contribute up to the amount of your annual health plan deductible, but not more than $2,700. If you have family coverage, you can contribute up to the amount of your annual health plan deductible, but not more than $5,450. See Rules for married people (discussed later).

For 2006, you must be an eligible individual and have the same coverage all year to contribute the full amount. If you do not qualify to contribute the full amount for the year, determine your contribution limit by using the worksheet for line 3 in the Form 8889 instructions.

Example 1.

In 2006, you have an HDHP for your family for the entire months of July through December (6 months). The annual deductible of your HDHP is $4,000. You are under age 55. On the worksheet for line 3 in the Form 8889 instructions, you show $4,000 for each month (July - December) that you are an eligible individual. You divide the total of those amounts ($24,000) by 12 to determine your contribution limit ($2,000) for the year.

Example 2.

For 2006, you are an eligible individual with self-only HDHP coverage. Your annual deductible is $1,200. You get married in March and beginning April 1, 2006, you and your spouse have family HDHP coverage with a $2,400 deductible. Both of you are under age 55. Your spouse is not an eligible individual. On the worksheet for line 3, you would show $1,200 for the first 3 months and $2,400 for the last 9 months. You divide the total of those amounts ($25,200) by 12 to determine your contribution limit ($2,100) for the year.

If your spouse became an eligible individual during 2006, you would have to allocate the deductible for the family HDHP coverage for the period you were both eligible individuals equally between you and your spouse unless you agree on a different allocation, including allocating nothing to one spouse. You would not allocate the self-only deductible between you and your spouse.