How to Put Money Into Your HSA

The three ways to fund your HSA

You can contribute to an HSA through payroll deductions, direct deposits from your bank account, or by mailing a check to your HSA provider. Payroll deduction is the most common route because your employer can contribute at the same time, and the money comes out before taxes are calculated — meaning you save on federal income tax, Social Security tax, and Medicare tax all at once.

If you don't have an employer plan or your employer doesn't offer HSA contributions, you can set up contributions on your own through your HSA provider's website or by phone. The process takes about 10 minutes and requires your bank account number and routing number.

Some people use all three methods in the same year. For example, you might have $2,000 come through payroll, then add $1,000 from your bank account later when you have unexpected medical expenses.

Key Takeaways

• Payroll deduction lets your employer contribute and saves you three types of tax at once, making it the most tax-efficient method if your employer offers it.
• You can contribute on your own through your HSA provider's website or by mailing a check, even if your employer doesn't offer payroll deductions.
• The annual contribution limit for 2024 is $4,150 for individual coverage and $8,300 for family coverage, though these amounts change each year.
• Contributions made after the tax year ends can still count for that year if you make them by the tax filing deadline, usually April 15.
• Your HSA provider will send you a Form 1099-SA at tax time showing all contributions and withdrawals, which you report on your tax return.

Setting up payroll deductions through your employer

If your employer offers HSA contributions, you'll enroll during your company's open enrollment period, usually in the fall or when you first become may be able to access for a high-deductible health plan. You'll choose a dollar amount to contribute each pay period, and that amount will be deducted from your paycheck before taxes are calculated.

Contact your benefits or human resources department to find out whether your employer offers HSA contributions and when enrollment opens. Some employers contribute a set amount for all employees; others match a percentage of what you contribute, similar to a 401(k). A few do both — they contribute a base amount plus a match.

Once you enroll, the contributions happen automatically. You don't have to do anything else unless you want to change the amount, which you can usually do during the next open enrollment period or if you have a may have access to life event like a marriage or birth.

Contributing on your own through your HSA provider

If you're self-employed, your employer doesn't offer HSA contributions, or you want to add money beyond what your employer contributes, you can deposit funds directly. Log into your HSA provider's website — this might be Fidelity, Lively, HealthEquity, or another company depending on which plan you chose — and look for a "Contribute" or "Add Funds" button.

You'll enter your bank account information and the amount you want to transfer. Most providers process transfers within one to three business days. Some also let you set up recurring monthly or quarterly transfers so you don't have to remember to contribute each time.

If you prefer not to use online banking, you can mail a check directly to your HSA provider. The check should be made out to your HSA provider, not to yourself, and include your account number on the memo line. Mail it to the address listed on your provider's website or your account statements.

Understanding contribution limits and deadlines

The IRS sets an annual limit on how much you can contribute to an HSA. For 2024, the limit is $4,150 if you have individual coverage or $8,300 if you have family coverage. These limits change most years, so check your provider's website or the IRS website before you contribute.

The limit applies to all contributions combined — from your employer, from you, and from anyone else who contributes on your behalf. If your employer contributes $2,000 and you contribute $2,000, you've hit the $4,150 limit for individual coverage and cannot contribute more that year.

You can make contributions for a given tax year until the tax filing deadline of the following year, usually April 15. For example, you can contribute for the 2024 tax year anytime between January 1, 2024, and April 15, 2025. If you contribute after April 15, it counts toward the next year's limit instead.

What happens if you contribute too much

If you accidentally contribute more than the annual limit, you need to withdraw the excess amount plus any earnings on that excess before the tax filing deadline. Your HSA provider can help you calculate how much to withdraw.

If you don't withdraw the excess in time, you'll owe income tax on the overage and a 6 percent excise tax. The excise tax applies every year the excess stays in the account, so it's worth fixing quickly if you notice a mistake.

To avoid this, keep track of all contributions — from your employer, from your own deposits, and from anyone else contributing on your behalf. If you change jobs mid-year, make sure you know how much your previous employer contributed before you add your own contributions at the new job.

Employer contributions and how they work

When your employer contributes to your HSA, that money is not counted as taxable income to you. It reduces your taxable wages for the year, which lowers your federal income tax bill. Your employer also saves on payroll taxes because the contribution reduces the amount of wages subject to Social Security and Medicare taxes.

Some employers make a single contribution at the start of the year; others contribute a set amount with each paycheck. A few employers contribute only if you contribute first — for example, they might match 50 percent of what you contribute, up to a certain amount.

If you leave your job, your employer's contributions stay in your HSA. You own the account and the money, regardless of where you work. You can continue to use it for medical expenses or let it grow as a retirement savings account.

Tracking contributions for tax purposes

Your HSA provider sends you a Form 1099-SA each January, showing all contributions made to your account during the previous year and all withdrawals you took. You'll also receive a Form 5498-SA, which shows the total balance in your account at the end of the year.

Keep these forms with your tax records. If you made contributions on your own (not through payroll), you may need to report them on your tax return using Form 8889, depending on your situation. Your tax preparer or tax software can tell you whether you need to file this form.

If your employer contributed, those contributions should already be reflected in your W-2 form as a reduction in your taxable wages. You don't report employer contributions separately on your tax return — they're already accounted for.

Frequently Asked Questions

Can I contribute to an HSA if I'm self-employed?

Yes. You can contribute as long as you're covered by a high-deductible health plan. You'll contribute on your own through your HSA provider's website or by check, and you can deduct your contributions on your tax return using Form 8889. The annual limit is the same as for employees.

What if my employer contributes but I want to add more money?

You can contribute additional funds on your own as long as the total from all sources doesn't exceed the annual limit. For example, if your employer contributes $2,000 and the individual limit is $4,150, you can add up to $2,150 more yourself.

Can I contribute to an HSA after I leave my job?

Yes. Once you own an HSA, you can continue to contribute to it even if you change jobs or become self-employed. You'll contribute on your own through your provider's website or by mail. Make sure you're still covered by a high-deductible health plan, or you'll lose the tax benefits.

Do I have to contribute the same amount every month?

No. If you're contributing on your own, you can deposit any amount at any time as long as you don't exceed the annual limit. If you're using payroll deduction, you can usually change your contribution amount during open enrollment or after a may have access to life event.

What if I contribute and then lose my high-deductible health plan coverage?

You can't make new contributions once you're no longer covered by a high-deductible plan. Any money already in your HSA stays there and can still be used for medical expenses tax-free. If you regain high-deductible coverage later, you can resume contributions.