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High-Deductible Medical Plans


If you are in very good health, a high-deductible medical plan is an excellent way for you to cut your healthcare costs. Firstly, (and most obvious) it brings down your monthly premium. But, did you know that most of these plans can be coupled with a Health Savings Account (HSA)? You can save up to $3,450 (as an individual) for 2018. This gives us yet another avenue to save toward debts or toward your retirement. It is critical to any financial plan that individuals take advantage of any and all programs that fit their situation.

Contribution Limit
Contribution Limit
Additional Catch-Up Contribution
(55 or older, Single and Family)

Limit on Contributions

  • The contribution amount to an HSA can depend on the type of HDHP coverage you have, your age and the date you become an eligible individual, and the date you cease to be an eligible individual.
  • If you were, or were considered (under the last-month rule), an eligible individual for the entire year and did not change your type of coverage, you can contribute the full amount based on your coverage.
  • If you were not an eligible individual for the entire year or changed your coverage during the year, your contribution limit is the greater of:
    1. The limitation shown on the Line 3 Limitation Chart and Worksheet in the Instructions for Form 8889
    2. The maximum annual HSA contribution based on your HDHP coverage (single or family) on the first day of the last month of your tax year (usually Dec. 1).

  • Last-month rule: If you are an eligible individual on the first day of the last month of your tax year (usually Dec. 1), you are considered an eligible individual for the entire year.
    • Under the last-month rule, you must remain an eligible individual during the testing period. The testing period begins with the last month of your tax year, and ends on the last day of the twelfth month following that month (e.g. Dec. 1, 2017 - December eligibility, 2018).
    • If you fail to maintain eligibility, the total contributions made to your HSA(except for the last-month rule) will be included as income in the year in which you fail to be eligible. The amount is also subject to a 10% additional tax.

  • Contribution amounts must be reduced by any amount contributed to an Archer MSA in the same tax year. This includes employer contributions to your Archer MSA.
  • Contributions cannot be made if you are on Medicare.

As always, we are here to help. Contact us today to discuss more about how high-medical deductible plans can fit into your overall financial plan.

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