LIVELY BLOG

Financial Health

If you’re the owner of an HSA, sometime in May (at least by June 1st) you will receive Tax Form 5498 from the trustee or administrator of your account. You may panic, because it looks like something that you should have submitted with your income taxes. Fear not, this form is only for your informational purposes.

When you open a health savings account (HSA), it's hard to imagine your small deposit growing into a sizable stash. But routine savings paired with investing adds up faster than you may expect. And before you know it, there could be ample funds to draw from when you need them.

HSAs are tax-advantaged accounts which can be part of a long-term wealth building strategy.

Your coverage doesn’t stop immediately upon your 26th birthday but at some point during the year you turn 26, depending on the type of insurance coverage your parents have. Your coverage will eventually stop though. This is because the health insurance system considers you an adult at this point, capable of maintaining your own health plan.

Tax Form 8889 is where the reporting for all of the activity on your HSA comes together and the form you’ll use to report said activity to the IRS. It’s a longer form than the others and has certain line items that could require you to complete calculations in order to arrive at the appropriate number for your situation (e.g. your maximum contribution limit and additional taxes owed).

HSAs have contribution limits set each year by the IRS. If you over-contributed to your HSA, what do you do? Well, you have a couple options. First, you can withdraw the excess contributions before Tax Day and avoid any penalties and extra paperwork. It’s important to note that simply spending the excess contributions on qualified medical expenses is not considered a withdrawal (it’s a distribution). To withdraw your contributions, contact your HSA administrator.