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HSA Funding Time Periods

A health savings account can be an excellent tool for saving taxes and reducing your overall health care expenses. With a health savings account, you put money aside to pay for your health care expenses, and you are eligible for a tax break on the money you put in. But before you put money into your HSA, you need to be aware of the time restrictions and limitations associated with these plans.

  1. Tax Filing Deadline

    • You have until the annual tax filing deadline to make your HSA contribution. In most cases, that deadline is April 15, but if that date falls on a weekend or a holiday it is generally extended until the following workday. You can file your taxes before you make your HSA contribution, but if you take the HSA tax deduction, you must make sure you make that contribution by the tax filing deadline.

    Use of Funds

    • If you expect to incur significant health care expenses during the coming year, you might want to pre-fund your HSA and take advantage of the tax benefits. For example, if you expect to have $3,000 in health care expenses, you can put that $3,000 into your HSA, then use those funds when you experience those medical costs. Then when you file your taxes you can take a tax deduction and get some of that money back.

    Periodic Investments

    • If you prefer, you can spread your HSA contributions out throughout the year, putting in a small amount of money each month until you reach your maximum annual contribution. This can be an excellent strategy if you are short on ready cash, or if you are adding additional money to an HSA that already contains enough money to fund your expected health care expenses.

    Rollover of Funds

    • The money in your health savings account rolls over from year to year, and you can add additional funds as soon as the new year begins. For 2011, you can add up to $3,050 to a health savings account that covers only yourself. If you have a health savings account that covers your entire family, you can add up to $6,050 to the plan. If you are at least 55 years of age, you can add an extra $1,000 to either an individual or a family plan HSA.

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