HSA FAQ

Federal regulations, primarily through the Internal Revenue Service (IRS), set the criteria for an individual to be eligible to open and contribute to an HSA. At a high level, the criteria are:

• You must be enrolled in an HSA-qualified medical plan.
• You can’t have any medical coverage that is not considered HSA-qualifed (including Medicare, Medicaid, or access to reimbursements through your or your spouse’s Health FSA)
• You can’t qualify as someone else’s tax dependent

No. Individuals enrolled in an HSA-qualified plan, whether or not they are the subscriber, are eligible to open and contribute to an HSA if they meet all other eligibility criteria. This means that a spouse, domestic partner, ex-spouse and/or child under age 26 who’s no longer a tax dependent – may be eligible to open and contribute to their own HSA.

Yes, you can own an unlimited number of HSAs, although owning additional HSAs doesn’t allow you to make contributions beyond your maximum or reimburse additional family members’ expenses tax-free. You may be subject to additional administrative fees when you own multiple accounts.

You should name a beneficiary when you open your HSA and can make changes to your beneficiary designation at any time. If your beneficiary is your spouse, the HSA passes to your spouse intact. If you name anyone else, the HSA is liquidated and the balance is distributed to your beneficiary, who may incur a tax liability. If you don’t name a beneficiary, the distribution of your HSA assets will be guided by the estate laws of your state of residence at the time of your death.

You can name and update beneficiaries when logged into your secure online account at Benstrat.com, using the Profile tab. Or, download, complete and return the HSA Beneficiary Designation Form found here.

No. Medicare doesn’t offer HSA-qualified coverage. If you’re enrolled in any Part of Medicare, you can’t open or contribute to an HSA.

No. Medicare issues individual contracts only. Because you can’t receive Medicare benefits through your spouse’s policy, his or her enrollment in Medicare doesn’t impact your HSA eligibility.

No. If you have coverage through a taxpayer-funded program like Medicaid (which may be called something different in your state), you can’t open or contribute to an HSA.

No. Medicaid (which may go by different names in your state) issues individual contracts only. Because you can’t receive Medicaid benefits through a family member’s policy, a family member’s enrollment in Medicaid doesn’t impact your HSA eligibility.

Yes. You’re not eligible during the traditional Health FSA plan year, even if you exhaust your balance before the end of the plan year. You can enroll in an HSA-qualified medical plan, but you can’t open or contribute to an HSA before the end of the Health FSA plan year.

FSAs with the Grace Period option: If you still have funds available on or after the last day of the plan year, you are not eligible to contribute to an HSA until the Grace Period end date.

FSAs with the Rollover option:  If you still have funds available on or after the last day of the plan year, you are not eligible to contribute to an HSA if funds rolled to a new plan year Health FSA. You will need to waive the rollover prior to the new plan year in order to be eligible to contribute to the HSA. However, you are eligible to contribute to an HSA if your employer offers a Limited-Purpose FSA and your funds rolled to the Limited-Purpose FSA.  

Note: Traditional Health FSA refers to a plan that reimburses medical, prescription drug, dental, vision and over-the-counter equipment and supplies (plus over-the-counter drugs and medicine with a valid prescription). You can become or remain HSA-eligible if you’re enrolled in a Limited-Purpose Health FSA, which reimburses dental and vision expenses only (plus preventive services that aren’t covered in full under the Affordable Care Act, or ACA).

For more information, see this question below: “If my spouse is or I am enrolled in a Limited-Purpose Health FSA, do I lose my HSA-eligibility?”

Under federal tax law, a Health FSA automatically covers the enrolled employee, his or her spouse and children to age 26 unless the employer restricts the individuals eligible for reimbursement (which is very rare). The same rules apply to your spouse’s FSA as explained in the above answer regarding your own Health FSA.

For more information, see this question below: “If my spouse is or I am enrolled in a Limited-Purpose Health FSA, do I lose my HSA-eligibility?”

No. Under federal tax law, Health FSA subscribers can’t reimburse a domestic partner’s (or ex-spouse’s) expenses through a Health FSA. Therefore, your domestic partner’s (or ex-spouse’s) participation in his or her employer’s Health FSA program doesn’t impact your HSA eligibility.

No. Limited-Purpose Health FSAs limit reimbursement to eligible dental and vision expenses, plus preventive services (many of which are now covered in full under the Affordable Care Act). You can enroll in these plans and be HSA-eligible.

No. You just need to make sure you’re only using the Post-Deductible FSA for eligible medical expenses once you’ve incurred the minimum deductible amount for your HSA coverage level (currently $1,400 for self-only coverage and $2,800 for family coverage.) You can use a Post Deductible Health FSA for eligible dental, vision and preventive services at any time.

To be HSA-eligible, your HRA must be a Post-Deductible HRA (you are responsible for at least the first $1,400 if you have self-only coverage and $2,800 if you have family coverage before the HRA begins to reimburse your claims). Any other HRA design makes you ineligible to open or contribute to an HSA.

You can remain HSA-eligible only if the care that you receive through the VA is for select preventive care or involves the treatment of a service-related illness, injury or condition. If you receive any other care at a VA facility, you lose your HSA eligibility to open an HSA and/or make contributions for three consecutive months following the care. This loss of eligibility may impact your maximum HSA contribution permitted for that year. Please see this question below: “I’m not HSA-eligible all 12 months this year. How much can I contribute to my HSA?”

You can remain HSA-eligible only if the care that you receive through the IHS is for select preventive services. If you receive any other care at an IHS facility, you lose your HSA eligibility to open anHSA and/or make contributions for three consecutive months following the month of the care. This loss of eligibility may impact your maximum HSA contribution permitted for that year. Please see this question below: “I’m not HSA-eligible all 12 months this year. How much can I contribute to my HSA?”

Most employers allow employees to make pre-tax payroll contributions. If your employer doesn’t (or you wish to make additional contributions outside your employer), you can contribute personal funds and deduct those contributions when you file your personal income taxes.

The IRS sets the annual contribution limit per calendar year (regardless of the month in which your coverage starts or renews) from all sources (including employer and employee). The figures are reviewed annually and adjusted as appropriate to reflect inflation. The current statutory maximum annual contribution figures are:

Self-only coverage: $3,600 in 2021 and $3,650 in 2022
Family coverage: $7,200 in 2021 and $7,300 in 2022

Yes, as long as you remain HSA-eligible, you can contribute an additional $1,000 annually beginning with the year that you turn age 55.

You can continue to make contributions for a tax year until the tax filing deadline for that year (usually April 15 of the following year) provided you don’t exceed the maximum contribution amount you are permitted for the number of months you were eligible in the tax year. For example, if you were eligible January 1 – November 30 (11 months out of 12), you would have until April 15 of the following year to contribute up to 11/12th of the maximum contribution permitted for your coverage tier and age.

No. Under current law, individuals eligible to make a $1,000 annual catch-up contribution beginning in the year of their 55th birthday must make the contribution into their own HSAs. Thus, your spouse would have to open his or her own HSA to make the contribution.

Yes, if your spouse meets eligibility criteria. In that case, you and your spouse can split the $7,100 (2020 figure)/$7,200 (2021 figure) statutory maximum annual contribution between your HSAs as you wish. Both you and your spouse, if you’re HSA eligible and age 55 or older, can make $1,000 catch-up contributions into your respective HSAs.

That’s a question to ask a financial or tax advisor as the regulations do not clearly address this.

Your maximum contribution is tied to whether your enrollment under the HSA-qualifed Medical plan is Self-only or Family, not the number of dependents who are HSA-eligible. If you have family coverage, your total contributions can’t exceed the Family statutory maximum annual contribution limit.

You must pro-rate your maximum contribution (and your catch-up contribution if you’re age 55 or older). Use the chart below to determine your maximum pro-rated contribution:

If you are HSA-eligible on December 1, you can take one of two approaches to determine your maximum contribution limit from all sources:

Option 1: Pro-rate. Use the table below to determine your maximum pro-rated contribution. If you don’t exceed this amount, you’ll have no follow-up compliance issues, though you won’t maximize your tax savings and may not contribute enough to meet all your eligible expenses.

Option 2: Last-Month Rule. You can contribute up to the statutory maximum for your coverage level (and up to the $1,000 catch-up maximum if you’re age 55 or older). You must remain HSA-eligible through the end of the following calendar year (the testing period). This approach allows you to maximize your tax savings and build your HSA balances more quickly (or reimburse more eligible expenses tax-free).

If you don’t remain HSA-eligible through the testing period, contributions in excess of the pro-rated amount are included in your taxable income, and you’re subject to an additional 10% tax as a penalty.  For example, if you contribute $2,000 above your pro-rated maximum and don’t remain HSA-eligible through the testing period, you include the $2,000 in your taxable income when you file your taxes for that year and pay an additional $200 tax (penalty).

Any applicable employer contribution and your pre-tax payroll contributions are included on your Form W-2 that your employer provides by January. 31. IRS Form 5498-SA will be posted in your online account by January 31. This form shows your total contributions (including personal contributions) during the prior tax year and is used to complete Form 8889. You’re responsible for completing Form 8889 and submitting it with your personal income tax return.

HSA contributions are tracked on the calendar year, regardless of when your medical plan renews or you first become HSA-eligible. If you exceed your contribution limit for the calendar year and don’t correct the issue, you must include your excess contribution in your taxable income for that year. Your excess contribution generally is subject to an excise tax as well.

You can correct excess contributions by removing the excess amount (and any earnings attributable to the excess contributions) before you file your personal income tax return for that tax year. By doing so, you do not include the amount of the excess contribution in your taxable income and you face no additional tax.

To remove excess contributions, complete the HSA Distribution Request form, indicating Excess Contribution Removal as the reason for the distribution request. If you have excess contributions due to a contribution error made by your employer, use the Correct Contribution Error – HSA Distribution Request form instead. Both forms can be found under the Tools and Support tab of your secure online account at benstrat.com.

If HSA related IRS Form 5498-SA and/or 1099-SA for the tax year in which the excess contribution was made have already been posted under the Statements and Notifications tab of your online account, you will receive an email notice when the corrected forms have been posted.

If you made the excess contribution through pre-tax payroll deduction, you need to work with your employer to ensure that your Form W-2, which your employer delivers to you by January 31 to help you complete your personal income tax return, reflects your contributions accurately. To do so, you need to correct the mistake before the end of the calendar year and notify your employer. If you remove your excess contribution after December 31 but before the due date of your personal income tax return (April 15 most years), you must notify your employer, who then will issue a corrected Form W-2.

No. However, any withdrawals for expenses that aren’t eligible are included in your taxable income. You also pay an additional 20% tax if you’re under age 65 and not disabled.

No. You need to be HSA-eligible to open and contribute to an account, but not to make tax-free distributions for eligible expenses that you and eligible family members incur on or after the date that you establish your HSA. Thus, an HSA is a lifetime account with tax advantages (tax-free account growth and tax-free distribution for eligible expenses) you can enjoy for the rest of your life – even if you’re no longer eligible to make additional contributions.

You can reimburse your own, your spouse’s and your tax dependent’s eligible expenses tax-free – regardless of whether they’re covered on your medical plan or are HSA-eligible themselves.

You can’t reimburse a domestic partner’s or ex-spouses expenses (unless they otherwise qualify as your tax dependent), or expenses incurred by an adult child who’s not your tax dependent (even if the child is covered on your medical plan). These individuals, if HSA-eligible, can open their own HSAs and reimburse their own eligible expenses tax-free.

Yes. You can reimburse a spouse’s (or tax dependents’) eligible expenses tax-free, whether or not that individual is HSA-eligible or covered on your health plan. What matters is the family member’s tax relationship to you at the time of the expense.

In this scenario, you can reimburse your spouse’s eligible expenses for medical (including Medicare cost-sharing), dental, vision and qualifying over-the-counter services and products tax-free from your HSA. One note: You can’t reimburse your spouse’s Medicare premiums tax-free from your HSA until you reach age 65.

No. A family member’s coverage doesn’t matter. If the child is no longer your tax dependent, you can’t reimburse his or her eligible expenses tax-free from your HSA, even if those expenses accumulate toward your policy’s deductible and out-of-pocket maximum.

Your child, if otherwise eligible, can open his or her own HSA, and the child, you or anyone else can make contribution to the account. The child receives the tax deduction for all contributions to the account from anyone other than an employer, even if someone else provides the funds.

No. Distributions from your HSA for services that your ex-spouse receives are included in your taxable income and subject to an additional 20% tax as a penalty if you’re under age 65 and not disabled. A judge can designate you as the party financially responsible for paying those bills, but the judge can’t override federal tax law and change the tax consequences of distributions from your HSA.

Your ex-spouse, if otherwise HSA-eligible, can open an HSA to reimburse his or her eligible expenses tax-free. Anyone, including you, can contribute to that HSA, though the accountholder receives the tax deduction for contributions made by anyone except his or her employer.

You can’t make a tax-free distribution for an expense that you incurred prior to establishing your HSA. Under the trust laws of most states, you establish an HSA with the initial deposit into the account. You can reimburse any eligible expense tax-free at any point in the future that you (or your spouse or tax dependents) incurred on or after your HSA establishment date.

No. As long as you incur the eligible expense after you establish your HSA, you can reimburse the expense with future HSA contributions. If you paid the expense with personal funds, you can reimburse yourself from your HSA.

You can reimburse the following eligible expenses tax-free from your HSA:

• Any cost-sharing (deductibles, coinsurance, copays) associated with your medical plan.
• Certain other services that are medically necessary but often not covered by insurance, including acupuncture, hearing aids and foot orthotics.
• Non-cosmetic dental services, including orthodontia.
• Prescription sunglasses and glasses, contact lenses and solution and vision correction surgery.
• Over-the-counter equipment and supplies.
• Over-the-counter (OTC) drugs, medicines, equipment and supplies like cough syrup, allergy medication, splints, bandages, CPAP machines, menstrual care products.

For more information, consult IRS Publication 502, published annually.

You can reimburse certain insurance premiums tax-free from your HSA:

• Medical insurance, but only if you’re collecting unemployment benefits or continuing coverage through COBRA.
• Medicare Part B (outpatient services) and Part D (prescription drugs) premiums once you turn age 65.
• Medicare Part C premiums once you turn age 65.
• Long-term care insurance premiums, subject to IRS limits based on age.

For more information, consult IRS Publication 502, published annually.

No. You don’t submit receipts to substantiate that an expense is eligible for tax-free reimbursement, since you can withdraw funds from your HSA for any purpose (subject to taxes and possible penalties if the expense isn’t eligible).

You do need to retain receipts, though, in case the IRS audits your personal income tax return.  You report each year on Form 8889 (submitted with your personal income tax return) how much you withdrew from your HSA and how much of the withdrawal was for eligible expenses. (IRS Form 1099-SA will be posted to your online account by January 31 each year. This Form reports all distributions made from your HSA during the prior tax year and is used to complete IRS Form 8889.) If you’re audited, you may have to provide documentation, such as receipts,  showing the date of purchase, item purchased and amount of the purchase.

Yes, we can help you. You need to correct the error before you file your personal income tax return for the year in which you made the mistaken distribution. Please contact our customer service for assistance.

You retain balances in your account to use in the future. You don’t forfeit unused funds at the end of the year.

IRS Form 1099-SA will be posted in your online account by January 31 each year. This document reflects total distributions from your account during the previous calendar year. The form doesn’t show whether the distributions are for eligible (tax-free) or ineligible (included in your taxable income and possibly subject to additional taxes) expenses.

You complete form 8889 when you file your personal income tax return. You report to the IRS your distributions for eligible and non-eligible expenses. Distributions for eligible expenses are tax-free, while those for non-eligible expenses are included in your taxable income and are subject to an additional 20% penalty if you’re under age 65 and not disabled.

No. Rollovers from a Health FSA to an HSA aren’t permitted under federal tax law.

No. Rollovers from an HRA to an HSA aren’t permitted under federal tax law.

Yes. In fact, it’s common for an individual who opened an HSA with one employer to move balances to an HSA set up through another employer. While you can own multiple HSAs, most individuals find it easier and less expensive to manage a single account. Call us (888-401-3539) to learn more about transferring balances from your current HSA to your Benefit Strategies HSA.

You can make a one-time rollover from an IRA (and only an IRA – you can choose to consolidate IRAs into a single IRA or transfer funds from another type of retirement account into an IRA, if permitted, prior to rolling funds to the HSA). Your rollover counts against your annual contribution limit. You must remain HSA-eligible for a full 12 months after the month that you complete the rollover. If you fail to remain HSA-eligible through this “testing period,” your entire rollover is included in your taxable income and subject to an additional 20% tax.

Contact customer service to learn more about transferring balances from your IRA to your Benefit Strategies HSA.

See IRS Notice 2008-51 for more information on rolling over funds from an IRA to your HSA.

You receive a set of two debit cards, both in your name.. You can use the card at the point of service/purchase, write the number on a provider bill, and give the number to your mail order pharmacy.

You can request a distributions through your online account or through the mobile app and either have the funds electronically deposited into your personal financial account at not cost or request a check (fee may apply.)

Benefit Strategies charges a monthly administrative fee, which may be paid by your employer or you. You don’t pay fees for electronic monthly statements and electronic distributions to your personal financial account. If you choose paper statements or paper checks, a fee may apply. You pay the monthly administrative fee when you terminate employment but keep your HSA open, and there is also an account closure fee that will be deducted from your account at the time you choose to close it.

Consult your fee schedule (posted in your online account) for details of all applicable fee amounts.

Yes. Your cash balance is protected by FDIC insurance. Invested funds are not FDIC insured.

Yes. You can invest in select mutual funds. Please click here for a list of funds, or go to benstrat.com and look under the Employee/Participant tab’s Health Savings Account link.

Yes. You can download the mobile application to manage your HSA on your mobile device, including viewing transactions, making contributions and requesting distributions. Search Benefit Strategies in the Apple App Store and Google Play Store; look for the app with the yellow sun logo.

Access our website, www.benstrat.com. Click on the blue Individual Login link in the top right corner. Click Login under the Reimbursements, Rewards, Savings & Spending Accounts in the drop down. This will bring you to the Login screen. If you’ve accessed the Benefit Strategies online portal in the past, use your existing Username and Password, otherwise use the New User link to set up your Username and Password.

Our customer service representatives, located in our Manchester, NH office, are available Monday – Thursday 8:00am – 6:00pm and Fridays from 8:00am – 5:00pm, ET.

Toll Free: 888-401-3539, language translation service is available.
Live Chat: Text 888-401-3539 or click the Get Help tab on the right side of this screen.
Email: info@benstrat.com