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The Vanguard Group

Health savings accounts (HSAs): Q&A

Last updated: 31 Mar 2014  BenefitsMailbox, Ext. Ext. 34BEN or 800-407-8576
 

Annual contributions

What are the annual contribution limits for an HSA?

The maximum amount you may contribute to your HSA in 2014 will depend on the following factors:

  • The type of coverage you choose (individual or family).
  • The Vanguard employer contribution (if you establish your HSA with Health Savings Administrators).
  • Deposits received for participating in the Point$ Bank rewards program.
  • Qualification for a catch-up contribution.*

Take a look at the table below to see how Vanguard's employer contribution, your Point$ Bank rewards, and personal contributions all count toward the annual HSA contribution limits.

  2013 2014
Maximum annual HSA contribution limit

Individual coverage: $3,250
Family coverage: $6,450

Individual coverage: $3,300
Family coverage: $6,550

Amounts that count toward the annual HSA contribution limits
Vanguard employer contribution
(Granted if you establish your HSA with Health Savings Administrators)

Individual coverage: $600
Family coverage: $1,200

Individual coverage: $600
Family coverage: $1,200

Point$ Bank rewards
(Granted if you establish your HSA with Health Savings Administrators)

You and your covered spouse or domestic partner may each receive up to $375 in additional contributions to your HSA for participating in the Point$ Bank rewards program.

Your personal contribution limit via payroll deduction

(See question below to determine how amounts are calculated.)

Individual coverage: $2,650
Family coverage: $5,250

Individual coverage: $2,325

Family coverage with a covered spouse or domestic partner: $4,600

Family coverage without a covered spouse or domestic partner: $4,975

*Note: The catch-up provision allows you to contribute an additional $1,000 to your HSA if you reach age 55 by December 31 of the plan year.

Visit the Vanguard employer contribution Q&A for more details on when your Vanguard employer contribution and Point$ Bank rewards are deposited into your HSA.

How does Vanguard determine my personal contribution limit via payroll deduction?

Since Vanguard's employer contribution, Point$ Bank rewards, and your personal contributions all count toward the annual HSA contribution limits, Vanguard restricts the amount crew members can contribute via payroll deduction to help prevent excess contributions.

  • 2014: The limit of your personal contributions via payroll deduction was determined by taking the 2014 maximum annual HSA contribution limit and reducing it by:
    • The Vanguard employer contribution.
    • The maximum potential Point$ Bank rewards.

    Note: If you do not receive the maximum amount of Point$ Bank rewards but would like to contribute the maximum for 2014, you may contribute to an HSA outside of payroll deductions by submitting a personal check to Health Savings Administrators. It will be your responsibility to monitor all contributions for the year to ensure you do not exceed the annual maximum contribution limit.

  • 2013: The limit of your personal contributions via payroll deduction was determined by taking the 2013 maximum annual HSA contribution limit and reducing it by the Vanguard employer contribution only.

What is the penalty for making an excess contribution to my HSA?

If you over-contribute to your HSA, you must pay income tax plus a 6% excise tax on any excess contributions and related earnings for each tax year the excess contributions remain in your HSA. To avoid the excise tax on excess contributions, remove the year's excess contributions and related investment earnings before the last day to file federal income taxes for the year, generally April 15.

What is the deadline for contributing to my HSA?

If you meet the eligibility requirements, you may contribute to your HSA for 2014 until April 15, 2015.

Note: Payroll contributions to the HSA will cease after the last pay period in December 2014. Any contributions you would like to make between January 1, 2015, and April 15, 2015, up to the contribution limit, may be made directly to your HSA through your HSA administrator.

If I enroll in the HDHP after January 1 but by December 1, may I still contribute the maximum annual HSA contribution for that year?

Yes. This falls under the full contribution rule, but you will be subject to a "testing period." The testing period requires you to stay enrolled in the HDHP and remain HSA eligible for the following plan year through December 31. If you satisfy the testing period your maximum contribution to your HSA will be the greater of:

  1. The annual contribution limit for an HSA based on the type of coverage (individual or family) you have on December 1; or
  2. The sum of the monthly limits for each month you are HSA eligible. To determine this amount, divide your maximum annual contribution limit by 12 and multiply by the number of months you were eligible.

Note: If you fail to satisfy the testing period for reasons other than death or disability, any contributions that were previously permitted—solely because of the full contribution rule—become taxable and subject to an additional 20% penalty tax. This adverse tax treatment cannot be avoided by distributing the extra amount from the HSA.

What if I change my coverage level (e.g., family to individual) midyear?

The amount of tax-free contributions a person can make or receive is determined on a monthly basis. So, any coverage changes you make during the year will affect the contribution amount. The following example shows what happens with a change in coverage.

Tom has family coverage from January 1 to September 30, 2014. After his divorce, he switches to crew member only coverage for October 1 to December 31, 2014. The amount of tax-free contributions that Tom can make in 2014, including the employer contribution and Point$ Bank rewards, is approximately $5,737.50. The annual maximum contribution is based on nine months of family coverage: ($6,550/12) x 9 =$4,912.50; and three months of crew member only coverage: ($3,300/12) x 3 = $825.00.

What is the contribution limit if I cover a domestic partner through my HDHP?

If you cover a domestic partner through your HDHP, you are eligible to contribute up to the annual maximum for family accounts. If covered by your HDHP, your domestic partner may also be eligible to establish his or her own HSA. This provision may allow your domestic partner to receive tax-free distributions from an HSA, and for both of you to contribute up to the family coverage limit.

Note: If you request reimbursement from your HSA for your domestic partner's health care expenses when he or she does not qualify as your tax dependent for health coverage purposes, be aware that such a distribution is taxable and subject to an additional 20% excise tax if your domestic partner is under age 65.

Can I set up HSA contributions through payroll deduction? Once established, how do I change my contribution amount?

Yes. You may set up biweekly HSA payroll deductions during Open Enrollment (for the upcoming plan year). You may also change your payroll deductions at any time throughout the year by submitting an "HSA Contribution Change" via Report your life event.

Note: In order to contribute via payroll deduction, your HSA must be established with Health Savings Administrators.

When will my HSA payroll contributions begin?

Your HSA payroll deductions will begin the first pay period of the month following the effective date of the elections or contribution change. You must establish an HSA with Health Savings Administrators before payroll deductions can begin.

Payroll deductions will automatically be capped at the 2014 maximum annual contribution, taking into account the Vanguard employer contribution and the maximum potential amount you may receive in Point$ Bank rewards.

Note: No adjustments will be made for personal contributions made outside of payroll deduction. As a result, you should monitor your personal contributions to ensure you do not exceed the maximum annual contribution limit.

May I contribute to an HSA outside of payroll deductions?

Yes. You may contribute to an HSA outside of payroll deductions by submitting a personal check to Health Savings Administrators. If your account is with another institution, contributions via paycheck deduction will not be available, and all contributions must be made via check. You are responsible for keeping track of all contributions for the year to ensure you do not exceed the annual maximum contribution.