What Happens if I Contribute to an HSA But Don't Have a High Deductible?

Health Savings Accounts (HSAs) are a great way to save for medical expenses while enjoying tax advantages. However, to qualify for an HSA, you need to be enrolled in a High Deductible Health Plan (HDHP). But what happens if you contribute to an HSA but don't have a high deductible?

One of the key benefits of an HSA is the ability to contribute funds on a pre-tax basis, which can lower your taxable income. If you contribute to an HSA without having a high deductible, you may face penalties and taxes on the excess contributions. Here's what you need to know:

• If you contribute to an HSA without being enrolled in an HDHP, the contributions are considered excess and are subject to a 6% excise tax.
• The excess contributions will be included in your taxable income for the year.
• To avoid penalties, you can withdraw the excess contributions before the tax filing deadline.

Health Savings Accounts (HSAs) offer valuable tax benefits and a way to prepare for medical costs, but eligibility hinges on being part of a High Deductible Health Plan (HDHP). So, what are the consequences if you mistakenly contribute to your HSA without adhering to this requirement?