HSA's: Do the monthly premiums for the healthplan serve as the actual contributions to the account?

Question

Cafeteria 125 is in effect so it's plausible. I can't see how contributions could actually be in addition to premiums; it's already enough punishment having to cover such a large deductible. Anyhow, I've been reading up as much as I can, HSAinsider, etc., but I cannot determine the answer to this fundamental question!

Answer 1

NO, is the short answer.
Here is a quick definition of HSA plans:
1. High Deductible plans that are HSA Eligible= Keeps premiums low, normally 40-60% less than traditional premiums. The basic idea is that you will take the savings and open up a HSA account at a bank or financial institution and deposit the savings.
2. HSA Account is not subject to Federal Tax's on any interest earned! The money you save and the interest accumulates and grows each year, whatever you have left over and is not used for medical claims at 65 yrs of age can be used for retirement.

I hope that helps- HSA plans are not for everyone, most people that have I have signed up are "Money people" normally the person tends to be a professional ie. Doctor, Lawyer, Business Owner, who often listens to a Money Guru ie. Bob Brinker and has a portfolio, I have signed up literally thousands of HSA's and I would say 97% fit that mold. HSA's offer a incredible long term strategy for lowering Adjusted Gross Income, and offer way to save pre-tax money and also grow money without paying tax's on earned interest. For a money person, those three facts sends a chill through them, for others it just puts them to sleep.

If you have any other questions feel free to contact me directly.
Rudy Rivas, President www.HSAInside.com

Answer 2

Line 25 of the 1040 is for your personal AFTER-TAX contribution to the HSA. If the money you put in was through work and already pre-tax, you don't get a second deduction for it. The amount that your company paid towards your HSA was supposed to be part of the W-2, box 12, code W total. This amount feeds to the 8889, line 9 and is intended to PREVENT you from accidentally contributing more than the maximum amount. If you didn't overcontribute, you can safely ignore it. The 5498-SA (due in May, after you file because it's not a source document for filing) will show the total contributed to your HSA in 2010. It will include any after tax contributions you made directly to the HSA (which you enter on line 2 of the 8889 and convert to pre-tax via line 13 on the form and line 25 of the 1040), as well as any pre-tax contributions you made through work (FSA, premium conversions) as well as any matching by the employer. Even though ADP had the amount in box 12, code W wrong, the 5498-SA will have the correct total. Let's say you had a self-only plan that allowed you to contribute $3050 to it. Your boss contributed $500. You contributed $500 through work pre-tax. Your W-2 should have shown $1000 for box 12W, but only shows $500. You *also* wrote a check to max the money out. As long as your check was $2050 or less, no problem. This is true even if the W-2 box 12, code W only showed $500 when it should have shown $1000. If you contributed, by accident, $2550 because the software suggested you could as long as you made the contribution before 4/18/2011, you have a problem. Your limit was $2050, but you put $500 too much because you forgot about the employer contribution (or worse, counted the extra $500 as money you paid as after tax). If that's the case--then you need to withdraw the extra and file an amended return to add the $500 back to income. If you don't, you will get a nastygram from the IRS hitting you with a 6% excise tax on the $500 extra in the HSA for every year it stays there.

Answer 3

No...the HSA account is completely separate from the health plan. The health plan simply QUALIFIES as a eligible for opening and deferring income based on the deductible. According to IRS regulation...it is expenses for medical care which qualifies ... HOWEVER ... you are eligible to pay your Long Term Care premiums from your HSA account.

Answer 4

Premiums and HSA contributions are completely separate. In some cases, they're not from the same company.

Answer 5

An HSA is an extra savings that you can apply to your health expenses. Your premiums are only for your insurance; they don't apply in any way to your HSA.