How can you over contribute to HSA? Common Mistakes to Avoid

Health Savings Accounts (HSAs) are a great way to save for medical expenses while enjoying tax benefits. However, it's crucial to understand the contribution limits to avoid over contributing. So, how can you end up over contributing to an HSA?

One common mistake leading to over contributions is failing to keep track of contributions across multiple accounts, such as having an HSA with a previous employer and opening a new one with a new employer.

Another way to over contribute is not accounting for employer contributions which are included in the annual contribution limit. If you exceed this limit, you may face tax penalties.

Additionally, contributing more than the yearly limit set by the IRS can also result in over contribution. As of 2021, the annual contribution limits are $3,600 for individuals and $7,200 for families.

Health Savings Accounts (HSAs) provide an excellent opportunity for individuals to set aside money for healthcare expenses while simultaneously benefiting from significant tax advantages. However, it's important to stay vigilant about the annual contribution limits to steer clear of over contributions. One frequent pitfall is neglecting to monitor contributions when juggling HSAs from various employers.