Insights

Reminder: 2016 HSA Contributions and Corrections Deadline is April 18


Individuals who were HSA eligible in 2016 have until the tax filing deadline to make or receive contributions. Thus, 2016 HSA contributions must generally be made by April 18, 2017. This includes employer contributions. The 2016 contribution limit is $3,350 for self-only coverage and $6,750 for any tier of coverage other than self-only. Those aged 55 and older are permitted an additional catch-up contribution of $1,000.An individual’s maximum annual contribution is limited by the number of months he was eligible for the HSA. There is an exception to this rule. If the individual was HSA eligible on December 1, he is permitted to contribute the full statutory maximum for the year. However, if he does not remain HSA eligible through December of the following year, he may experience tax consequences.If an individual has contributed more than the allowable amount for 2016, he should be refunded the excess contributions and associated interest by April 18, 2017. The excess would be subject to income tax. If the excess is not refunded from the account, it will not only be subject to income tax, but also a 6 percent excise tax penalty.If an employer is aware of an employee who was not eligible for a contribution or who has contributed more than the allowable amount for 2016, they should work with the HSA bank/trustee to process the excess contribution.