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Health Savings Account (HSA) Contribution Rules

Provided by BB&T Insurance Services, Inc., McGriff, Seibels & Williams, Inc., BB&T Insurance Services of California, Inc., and Precept Insurance Solutions, LLC. Health Savings Account (HSA) Contribution Rules Highlights: Contribution LIMITS Links and IRS Publication 969, Health Savings For 2018, $3,450 for individuals with self- Resources: Accounts and Other Tax-favored Health only coverage and $6,850 for individuals Plans with family coverage. IRS Notice 2004-50. Individuals who are age 55 or older may IRS Rev. Proc. 2017-37, which includes make an additional $1,000 catch-up the inflation-adjusted HSA Contribution Contribution . limits for 2018.

Provided by BB&T Insurance Services, Inc., McGriff, Seibels & Williams, Inc., BB&T Insurance Services of California, Inc., and Precept Insurance Solutions, LLC

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Transcription of Health Savings Account (HSA) Contribution Rules

1 Provided by BB&T Insurance Services, Inc., McGriff, Seibels & Williams, Inc., BB&T Insurance Services of California, Inc., and Precept Insurance Solutions, LLC. Health Savings Account (HSA) Contribution Rules Highlights: Contribution LIMITS Links and IRS Publication 969, Health Savings For 2018, $3,450 for individuals with self- Resources: Accounts and Other Tax-favored Health only coverage and $6,850 for individuals Plans with family coverage. IRS Notice 2004-50. Individuals who are age 55 or older may IRS Rev. Proc. 2017-37, which includes make an additional $1,000 catch-up the inflation-adjusted HSA Contribution Contribution . limits for 2018.

2 IRS Rev. Proc. 2018-18, which Contribution Rules decreased the 2018 HSA Contribution For each month an individual is HSA-eligible, limit for family coverage from $6,900 to he or she may contribute one-twelfth of the $6,850. applicable maximum Contribution limit. The full- Contribution rule is a special rule that allows an individual who is HSA-eligible for only part of a year to make a full year's worth of HSA contributions. A special Contribution limit applies to married spouses when either spouse has family HDHP coverage. Many employers offer high deductible Health plans (HDHPs) to control premium costs and then pair this coverage with Health Savings accounts (HSAs) to help employees with their Health care expenses.

3 An HSA is a tax-favored trust or Account that can be contributed to by, or on behalf of, an eligible individual for the purpose of paying qualified medical expenses. For example, individuals can use their HSAs to pay for expenses covered under their HDHPs until their deductibles have been met, or they can use their HSAs to pay for qualified medical expenses not covered by their HDHPs, such as dental or vision expenses. HSAs provide a triple tax advantage contributions, investment earnings and amounts distributed for qualified medical expenses are all exempt from federal income tax, Social Security/Medicare tax and most state income taxes.

4 Due to an HSA's potential tax Savings , federal tax law includes strict Rules for HSA contributions. WHO CAN CONTRIBUTE TO AN HSA? Only an eligible individual can establish an HSA and make HSA contributions (or have them made on his or her behalf). An individual's eligibility for HSA contributions is generally determined monthly, as of the first day of the month. To be HSA-eligible for a month, an individual must: Be covered by an HDHP on the first day of the month;. Not be covered by other Health coverage that is not an HDHP (with certain exceptions);. Not be enrolled in Medicare; and Not be eligible to be claimed as a dependent on another person's tax return.

5 HSA contributions can be made by the HSA accountholder or by any other person on his or her behalf, including an employer or family member. An individual who is no longer HSA-eligible may still contribute to his or her HSA (or have contributions made on his or her behalf) for the months of the year in which he or she was HSA-eligible. HOW MUCH CAN BE CONTRIBUTED TO AN HSA EACH YEAR? For each month an individual is HSA-eligible, he or she may contribute one-twelfth of the applicable maximum Contribution limit for the year. This limit is called the general monthly Contribution rule. The applicable maximum Contribution limit depends on whether the individual has self-only HDHP coverage or family HDHP coverage on the first day of the month.

6 Self-only HDHP coverage is HDHP coverage for only one HSA eligible individual. Family HDHP coverage is HDHP coverage for one HSA-eligible individual and at least one other individual (regardless of whether the other individual is HSA eligible). The maximum HSA Contribution limits are subject to an annual adjustment for inflation. By June 1 of each calendar year, the Internal Revenue Service (IRS) publishes the cost-of-living adjustments that will become effective as of the next Jan. 1. MAXIMUM Contribution LIMIT. TYPE OF COVERAGE 2016 2017 2018. Self-only HDHP coverage $3,350 $3,400 $3,450. Family HDHP coverage $6,750 $6,750 $6,850. This Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.

7 Readers should contact legal counsel for legal advice. Design 2017-2018 Zywave, Inc. All rights reserved. The information provided should not be considered tax or legal advice. Please consult with your individual tax advisor and/or attorney regarding your individual circumstances. Insurance products are offered by BB&T. Insurance Services, Inc., BB&T Insurance Services of California, Inc., Insurance Services, LLC, DBA Precept Insurance Solutions, LLC, and DBA as Proview Advanced Administrators, LLC, and McGriff, Seibels & Williams, Inc., all subsidiaries of BB&T Insurance Holdings, Inc. BB&T Insurance Services, Inc., CA Lic #0C64544; BB&T Insurance Services of California, Inc.

8 , CA Lic #0619252; Insurance Services, LLC, CA Lic #0747466; McGriff, Seibels & Williams, Inc., CA Lic #0E83682. 2018, Branch Banking and Trust Company. All rights reserved. Page 2. Except for rollover contributions, all HSA contributions made by or on Example: Gina, age 38, enrolls in family behalf of an HSA eligible individual are aggregated for purposes of HDHP coverage on Jan. 1, 2018, and is an applying the maximum Contribution limit. However, HSA HSA-eligible individual on that date. Her administrative fees or Account maintenance fees paid by the HSA coverage changes to self-only HDHP. accountholder (or someone on his or her behalf) are not HSA coverage on July 1, 2018, and she retains contributions, and do not count toward the annual Contribution limit.

9 That coverage through Dec. 31, 2018. She is an eligible individual for all 12 months in Also, all HSA contributions, except rollover contributions, must be 2018. She can contribute $5,150 ((6/12 . made in cash. For example, HSA contributions cannot be made in $6,850) + (6/12 $3,450)) to an HSA for stock or other property. 2018. Keep in mind that there are some special Contribution Rules for individuals who are age 55 or older, mid-year HDHP enrollees and married spouses with family HDHP coverage. These Rules , which are discussed below, may impact how much can be contributed to an individual's HSA each year. WHO IS ELIGIBLE TO MAKE CATCH-UP CONTRIBUTIONS?

10 Individuals who are age 55 or older by the end of the tax year are permitted to make additional HSA contributions, called catch-up contributions. The maximum annual catch-up Contribution is $1,000. Because the catch-up Contribution limit is not adjusted for inflation, it remains the same year after year. As with the general HSA Contribution limit, the catch-up Contribution limit is determined on a monthly basis. Example: On Jan. 1, 2018, Mary begins participating in self-only coverage under an HDHP. Mary turns age 65 on July 1, 2018, and enrolls in Medicare. She ceases to be an eligible individual for HSA purposes when she becomes enrolled in Medicare (on July 1, 2018).


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