HSA Contribution for 2019 – Not Too Late Yet

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Paying taxes every year may not be your favorite pastime, but you still have time to reduce your tax bill and certain out-of-pocket expenses.


With July 15 this year being the regular tax deadline due to the pandemic you still have time to maximize your contribution (if you already haven’t done so) to your HSA plan for 2019.

A Health Savings Account, or HSA, is a unique, tax-advantaged account that can be used to pay for current or future healthcare expenses.

If you are enrolled in a high-deductible health insurance plan (HDHP) you can qualify for an HSA. These plans are re-visited each year by the IRS, who determines the minimum deductible they must have and the maximum amount a plan-holder can spend out-of-pocket.

While the intention of the plan is to accumulate savings for medical expenses the savings can be used for general expenses after the age of 65 making it an attractive retirement savings option especially since there are no income limitations unlike an IRA or a Roth IRA.

HSA Contribution Limits for 2019:

HSA allows you to set aside funds for future medical expenses. The limits for health savings accounts (HSA) for 2019 are $3500 for an individual and $7000 for a family with a catch-up contribution of $1000 for folks over 55.

The annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) also should not exceed $6,750 for self coverage or $13,500 for family coverage.

HSA Plan Limits

Contribution Limits20192020
55+ Catch Up$1,000$1,000
Minimum Deductible
Max Out of Pocket

HSA offers Multiple Tax Benefits:

Contrary to popular belief HSA contributions are not just for medical expenses. They offer multiple tax benefits and other advantages.

  1. Contributions are tax-deductible: Similar to a 401(k), you can contribute pre-tax dollars to an HSA, which reduces your taxable income for the year.
  2. Earnings grow tax-free: HSA contributions can be invested in mutual funds, stocks, and other investment tools and they can grow tax-free.
  3. You can withdraw money tax-free: If HSA funds are used for qualified medical expenses then the money can be withdrawn tax-free. You can find a list of these expenses on the IRS’s website.
  4. Unlocks after 65: There is one caveat however to your HSA contribution. There is a lock-in period where until the age of 65 the HSA account can only be used to pay towards your medical expenses. After the age of 65 however, the funds are unlocked and can be used for any purpose without penalty, but may be subject to taxes if not used for IRS-qualified medical expenses.

Your HSA Rolls over Annually

The great thing about an HSA is that it stays with you. So if you get a new job or health plan, you keep your HSA. You can roll the account into your new employer’s plan or leave it alone. Either way, those funds are yours to use for qualified expenses.

Bottom line

If you’re expecting a potentially high tax bill in July, there’s still time to take some action to minimize what you might owe.

An HSA is a great option if you’re eligible because the contributions are tax-deductible for qualified medical expenses.

So, if your HSA isn’t funded to the maximum contribution limit, consider funding it to the maximum especially for you high earners out there who don’t have the option of contributing to an IRA or Roth IRA due to high-income limit restrictions. The HSA has no income limit restrictions. You can learn more about HSAs in IRS Publication 969.

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