April 03, 2018
Individuals who were HSA eligible in 2017 have until the federal tax filing deadline to make or receive contributions. Thus, 2017 HSA contributions, including employer contributions, must generally be made by April 17, 2018. The 2017 contribution limit is $3,400 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 the individual was eligible for the HSA.
There is an exception to this rule. If the individual was HSA eligible on Dec. 1, 2017, the individual is permitted to contribute the full statutory maximum for the year. However, if he or she doesn’t remain HSA eligible through December of the following year (2018), the individual may experience tax consequences.
If an individual has contributed more than the allowable amount for 2017, he or she should be refunded the excess contributions and associated interest by April 17, 2018. The excess would be subject to income tax. If the excess isn’t refunded from the account, it will not only be subject to income tax, but also a six percent excise tax penalty. If an employer is aware of an employee who wasn’t eligible for a contribution or who has contributed more than the allowable amount for 2017, they should work with the HSA bank/trustee to process the excess contribution.