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Good News: You Get More Time to Fund Your 2019 HSA

By Maurie Backman - Mar 31, 2020 at 9:07AM

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Here's why it pays to make those contributions.

Though not everyone is eligible to participate in a health savings account, or HSA, it's a smart option for workers with a high deductible health insurance plan who qualify. The reason? HSAs offer serious tax benefits. For one thing, contributions go in on a pre-tax basis, which means that any funds you put in represent income the IRS can't tax you on. Secondly, HSA funds don't expire, and any money you don't need immediately can be invested for tax-free growth. Finally, HSA withdrawals are tax-free as long as they're used for qualified healthcare expenses.

Right now, you have plenty of time to fund your 2020 HSA. But if you missed the boat on contributing to last year's account, here's some good news: You actually have three-and-a-half months to put money into your 2019 HSA.

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Why the new deadline?

Normally, taxes are due each year on April 15 unless that day falls out on a weekend or holiday, in which case the deadline gets moved back by a day or two. This year, because of the COVID-19 crisis, the federal tax-filing deadline has been pushed back all the way to July 15, giving filers an extra three months to get their taxes done and submit any necessary payment to the IRS.

Meanwhile, taxpayers are given until the filing deadline to finish funding an HSA from the year before. This means that normally, you'd get until April 15 to fund your 2019 HSA, but because of the tax deadline shift, you now get until July 15 to do so.

How much can you contribute to a 2019 HSA?

For the 2019 tax year, the annual contribution limit for HSAs is $3,500 for individuals, and $7,000 for families. Anyone who was 55 or older in 2019 can put in an additional $1,000 for a total of either $4,500 or $8,000. Keep in mind that these limits have gone up in 2020 by $50 for individuals and $100 for families, while the $1,000 catch-up for older savers remains the same.

Were you eligible for an HSA in 2019?

To qualify for an HSA in 2019, your health insurance plan needed to impose an annual deductible of $1,350 or more for individual coverage, or $2,700 or more for family coverage. Your annual out-of-pocket maximum also had to be capped at $6,750 or lower as an individual, or $13,500 or lower at the family level.

It pays to fund your HSA

If you're struggling to pay your bills right now, then funding last year's HSA is probably not on the table. But if you've managed to retain your paycheck throughout this crisis and are able to put money into your 2019 HSA, doing so is a good way to lower your tax burden for that year and pocket the difference. Besides, if there's one thing we can learn from the current crisis, it's that having money earmarked for medical bills is never a bad thing.

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