The Biggest Health Savings Account (HSA) Rules

Of course this is subject to opinion but at this time of the year, there are two specific HSA rules I like to focus on and remind people about.

The first is the establishment of one’s HSA account.  If you are one of those folks like me who got their HSA qualified High Deductible Health Plan early in the year, you might have been, ahem, a little bit slow to establish and the actual bank account (the HSA) that enables you to put $ aside for your present and future health care expenses.  You have until the end of the year (there are 31 days in December for those of us who are calendar impaired) to set up your account.

If you have not set up your HSA, there are two very good reasons why you should do it.  First off, you can not reimburse yourself from your HSA for any medical expenses you had prior to the date of the HSA being set up.  And secondly, you won’t be able to take any tax deductions for money you’d like to put into it for 2009.

The second rule ties to the first one.  So long as you get that account set up this year, you have until 4/15/2010 to make contributions for 2009.  This is key because even if you haven’t put a nickel in the account this year, you can still fund the account through 4/15/10 and take the full tax deduction for the deposit against your 2009 taxes.  If you do not take advantage of the tax benefits of your HSA you are “leaving free money on the table.”  And that’s, well, kind of stupid.

Now if you don’t have any $ to put into your HSA right now or would like to contribute more, one way to do so is through a program called My HSA Rewards.  It is a new stealth way to put $ into your HSA.  Basically it is a shopping program.  You shop through the merchants that participate in the program and get a % back from your purchases which can be deposited into your Health Savings Account.  Simple.