What if?

1. You can contribute to an HSA while covered under a full-purpose health care FSA (whether yours or a spouse’s).

True
False

*A full-purpose healthcare FSA (whether yours or a spouse’s) is considered other medical coverage by the IRS, disqualifying you from contributing to an HSA while FSA coverage exists.

True
False

*Your HSA funds can be used for the qualified medical expenses of you and your tax-dependents, even if they are not on your same insurance plan.

Your spouse/child(ren) will inherit your HSA automatically
It becomes part of your estate and is taxed accordingly
It depends who you have specified as the beneficiary of your HSA
Nothing, the money is lost

*If your spouse is the beneficiary of your HSA, the account becomes their HSA. If the beneficiary is not your spouse, your heir receives a distribution which becomes taxable to that individual. Failure to name a beneficiary means all assets in your HSA will be distributed to your estate and be taxed accordingly.

True
False

* If your adult child up to age 26 is covered by your family HSA-powered health plan but is not your tax dependent, they can open their own HSA and contribute up to the family maximum, which they can then use for their spouse’s/tax dependents’ qualified medical expenses.

You can contribute the maximum family amount between the two HSAs
You can each contribute the maximum individual amount
You can contribute the maximum individual amount between the two HSAs
You can each contribute the maximum family amount

* If you and your spouse have self-only HSA-compatible health coverage, you can each open your own HSA and contribute the yearly maximum for an individual.

True
False

*If an HSA owner is not 55+, they cannot make a catch-up contribution. However, if covered under a family HSA-compatible plan, the spouse is able to open his or her own HSA and contribute the additional $1,000.

You lose access to your HSA, and the money is returned to your employer
You can still use your HSA funds for qualified medical expenses
Your HSA is returned to you as a taxable distribution
Your HSA is frozen until you get new HSA-eligible coverage

*Your HSA belongs to you and remains yours to use, even if you change jobs or retire. If you retain HSA-compatible health coverage, you may continue contributing to your HSA.

You cannot withdraw HSA funds for non-medical expenses
You can withdraw funds, at which point the funds will be subject to income tax and an additional penalty
You can take hardship loan from your HSA and pay it back later
There is no penalty for non-medical HSA distributions

*Non-medical HSA fund withdrawals are subject to income taxes and a 20% penalty.

You can pay the expense out-of-pocket and reimburse yourself when funds are available
You can discuss a payment plan with your provider
You can make a one-time contribution at the beginning of the year
All of the above

*If your medical bills exceed your current HSA balance, you are able to pay the expense out-of-pocket and reimburse yourself when funds are available, establish a payment plan with your provider, or even make a one-time contribution to cover the expense.

True
False

*If your coverage level changes mid-year, you are required to pro-rate your contributions for the portion of the year you received each level of coverage.

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HSA WHAT-IF QUIZ

1. You can contribute to an HSA while covered under a full-purpose health care FSA (whether yours or a spouse’s).

2. You can use your HSA dollars to cover your tax-dependent child’s medical expenses, even if they are covered under your spouse’s non-HDHP health plan.

3. In the event of your death, what happens to your HSA?

4. If your child up to age 26 is covered under your HSA-powered health plan, but you cannot claim them as a tax dependent, they can open their own HSA and contribute up to the family maximum as long as they meet all other HSA eligibility requirements.

5. If both you and your spouse have your own individual HSA-compatible plan and HSA, how much can each of you contribute to your HSAs?

6. If you are 52 years old, and your covered spouse is 56, you can contribute the additional $1,000 catch-up contribution into your HSA.

7. What happens to your HSA if you change jobs or retire?

8. What if you really need the money in your HSA for non-medical reasons?

9. What if you incur a large medical expense at the beginning of the year before your HSA is funded?

10. If your insurance coverage changes from family coverage to individual coverage mid-year, you can still contribute the full family maximum that year.