Employees who contribute through a payroll deduction can designate the amount and change it throughout the year. They can also contribute separately on their own by mailing a check or in a number of other ways. One recommendation Dr. Votava mentioned is an IRA direct rollover, a one-time-only opportunity to transfer funds to a HSA without an IRA distribution penalty or tax.
She cautioned, however, that HSA regulations are constantly in flux. So it's crucial to stay up to date by. Follow her updates on social media. She also pointed listeners to several government publications that lay out specific rules. Among the fine print: contributions in excess of the annual limit incur a 6% penalty, though that may be reversed if the mistake is reported promptly. Withdrawals spent for nonqualified purposes trigger a 20% penalty.
In the final 15 minutes, Dr. Votava took questions. One concerned 401(k)s. She recommended first filling your HSA with enough to cover your deductible, then contributing to a 401(k) to maximize an employer's matching contributions. After that, you can contribute more to the HSA till you've reached the annual maximum.
She also explained that there's no time limit for reimbursing yourself for a qualified medical expense. You could even keep a receipt for several years, to allow the HSA to keep growing, and only withdraw the funds when you hit a cash-flow snag.
Dr. Votava will present at two upcoming conferences in Dallas: "Hot Topics in Health Care: Invest in Women" (May 9-10) and "Health Care Planning for Retirees in an Uncertain Environment" (May 11-12).