Can You Put Investment Income Into an HSA?

Contributing to a health savings account carries a number of important benefits, including the ability to cover your basic health care expenses using pre-tax money. You can also combine a health savings account with a high deductible health plan and save money on premiums, all while knowing that you are protected by the money you put into the plan.

Income Types

• Some types of investments, like IRA accounts, require you to invest with earned income. That means that if you are retired or do not hold a traditional job you cannot contribute. The health savings account has no such restrictions. You can contribute to your health savings account using earned income if you wish, but you can also use investment income like dividends and capital gains to fund your account. This flexibility makes the health savings account an attractive alternative, particularly for self-employed individuals and those who do not have access to a health plan at work.

Contribution Limits

• While you can contribute any type of income you wish to a health savings account, you do need to abide by the limits set by the IRS. The tax agency reviews these limits on an annual basis and makes adjustments as necessary, so it is always a good idea to check the current limits before you make your annual contribution. As of 2011, you can put up to $3,050 into a health savings account that covers only yourself, and up to $6,150 into an account that covers your family. If you are 55 years of age or older, you can contribute an extra $1,000 to either a family or an individual plan.

Minimum Deductible

• Before you can have a health savings account, you must first have health insurance that meets the criteria for a high deductible health plan, or HDHP. In order to qualify as an HDHP, the plan must have a deductible of at least $1,200 for individual coverage or $2,400 for family coverage. If you buy your health insurance at work, you can check with your benefits office to see if your current coverage qualifies. If you shop for health coverage on your own, you can ask your broker for information on eligible plans.

Rollover Funds

• One advantage of health savings accounts over other similar programs is that the money rolls over from year to year. If you do not exhaust the funds in your health savings account by the end of the year, the money simply rolls over and remains available in the new year. Once the new year arrives, you can add additional funds as you wish, up to the current contribution limit set by the IRS.