There’s Still Time to Top Off HSA Contributions for 2019 through COVID Extended Tax Deadline

By Barrye Panepinto Miyagi – Partner | barrye.miyagi@taylorporter.com
Rebecca Hinton – Special Counsel | rebecca.hinton@taylorporter.com

Have you contributed the maximum to your Health Savings Account (HSA) for 2019? If not, there’s still time.

HSAs are savings plans for future health care expenses and they offer three primary tax benefits. First, contributions to HSAs may be made on a pre-tax basis, meaning income and payroll withholding taxes do not apply to the amount of HSA contributions. Second, any interest income earned on an HSA is tax-free. Third, money withdrawn from an HSA is not subject to income taxation if used to pay for qualified medical expenses, which include most services provided by licensed health providers. Over the course of many years the benefits of an HSA can add up to significant savings.

All money in an HSA belongs to the account owner at all times, and there is no limit on the amount of unused funds within an HSA that may be carried over from year to year. HSAs are typically held with a trustee or custodian such as a bank or brokerage firm. Participants must be enrolled in a high-deductible health insurance plan to contribute to an HSA.

There is a limit to annual contributions allowed to an HSA. That limit has historically changed each year.  For the year 2019, the limit is $3,500 per individual and $7,000 for a family. People who are 55 or older may contribute an extra $1,000 to an HSA in “catch-up” contributions.

“Prior year contributions” to HSAs may be made up to the annual federal income tax filing deadline, typically April 15th. However, because the 2019 tax year’s filing deadline has been postponed from April 15, 2020 to July 15, 2020 (for both federal income tax and Louisiana state income tax), contributions for the year 2019 may be made until July 15, 2020. The change in the 2019 tax filing deadline has no impact on the 2019 contribution limits.

For more information on HSAs, see IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

About Barrye Panepinto Miyagi: Taylor Porter Partner Barrye Panepinto Miyagi practices in the areas of general litigation, toxic tort defense, alternative dispute resolution, and Medicare Secondary Payer and MMSEA (Section 111) Compliance. Barrye also has significant experience in handling settlement and litigation issues related to the Medicare Secondary Payer Act. Barrye is ranked by her peers in Best Lawyers in America® (2020) in Product Liability Litigation - Defendants.

About Rebecca Hinton: Taylor Porter Special Counsel Rebecca Hinton represents individuals and businesses in the areas of federal, state and local taxation; tax controversies; estate planning; business matters; successions; and trusts. Rebecca is ranked by her peers among Best Lawyers® in tax law, and is rated Martindale-Hubbell AV-Preeminent. Rebecca is an adjunct professor at LSU Paul M. Hebert Law Center, and frequently presents at CLE and other seminars on the topics of federal estate and gift taxation, estate planning, and federal taxation. Rebecca serves as vice president of the Estate & Business Planning Council of Baton Rouge.