Can You Change Your HSA Contribution Mid-Year?
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Employer Contributions
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In some cases your employer might contribute money to a health savings account on your behalf. Many firms offer employer-funded health savings accounts to encourage their workers to choose a less costly high deductible health plan. If your employer makes regular contributions to a health savings account set up in your name, chances are those contributions cannot be changed. The employer might raise the amount put in each year, but there is typically no way for the worker to change those contributions.
Employee Contributions
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If you have your health savings account through your employer, you might have the ability to contribute to the plan through payroll deduction. When you first sign up, you can decide what percentage of your pay, or what flat amount, you want withheld from your paycheck to fund the HSA. If your employer allows changes to be made, you can adjust those percentages and amounts to direct more or less money into the plan. Ask the human resources department at your company for more information about changing your future HSA contributions.
Individual HSA
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If you have an individual HSA that is not an employer-sponsored plan, you can change the amount you contribute at any time. Many people have an automatic monthly transfer set up between their bank accounts and the HSA, making funding the account relatively easy and painless. If you wish, you can change the amount of that monthly contribution or suspend the transfers. When you fund the HSA on your own you have the choice of making a lump sum contribution each year or making smaller contributions throughout the year.
Contribution Limits
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If you do decide to change your level of HSA contributions mid-year, you need to ensure that the change does not put you over the yearly contribution limit. If you go over the annual health savings account contribution allowed by the IRS, you could be subject to taxes and penalties. For 2011, you can contribute up to $3,050 if you have an HSA that covers only yourself. If you have a family HSA, you can contribute up to $6,150. Special rules also allow those 55 and older to contribute an extra $1,000 to their HSA plans, for a total contribution limit of $4,050 and $7,150, respectively.
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