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Now, The IRS Penalizes Taxpayers 6% If They Save "Too Much" in Their HSA. How Much Does The Government Get From Those Mistakes Each Year?
FreeRepublic ^ | 20 Feb 2025 | Robert A Cook

Posted on 02/20/2025 3:25:19 PM PST by Robert A Cook PE

The democrat party (deliberately) wants to make it difficult, tedious, and confusing

- To be even eligible for a Health Savings Account,

- To start a Health Savings Account once eligible,

- To put money into your Health Savings Account,

- To use that money from your Health Savings Account,

- To transfer or inherit or even help somebody with your own money from your own Health Savings Account.

Worse, if by accident or by confusion (in the rules, or in the monthly amount saved, or by unexpected bonuses, promotions, or job changes) a taxpayer puts "too much" into an existing HSSA, the IRS penalizes that "excess donation" by an immediate 6& penalty, and a later penalty if the money is withdrawn "illegitimately".

Fine, we know the democrats will demand to continue their mandated limit on how much income each year saved into a Health Savings Account is not taxed by their IRS.

But, they argue that "If you try to save "too much" you must be penalized. To change this rule, they have demanded in the past that this money "must be replaced".

I can find no place on-line from any different government website that identifies just how much these penalties are in any past fiscal year.


TOPICS: Business/Economy; Health/Medicine; Military/Veterans
KEYWORDS: hsa; irs; penalty; taxes
Trump can work to remove this penalty - essentially allowing every American over 18 to create and save money into their own, or their family's HSA.

But, to change this rule, my past House Representative has demanded that this money "must be replaced". If so, how much "revenue" must be "paid for" by other cuts or taxes? (Again - Assuming he (his staff) was quoting House rules correctly.)

1 posted on 02/20/2025 3:25:19 PM PST by Robert A Cook PE
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To: Robert A Cook PE

Too much, as in, “You contributed over the set annual limit. Now take it back out.” Is that what your fussing about?

HSAs are great.


2 posted on 02/20/2025 3:31:48 PM PST by aspasia
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To: Robert A Cook PE

“If you try to save “too much” you must be penalized. To change this rule, they have demanded in the past that this money “must be replaced”.

I remember Pelosi saying that you had to increase spending to pay for tax cuts.
(Not so) Oddly you can’t find the video on it.


3 posted on 02/20/2025 3:33:26 PM PST by Darksheare (Those who support liberal "Republicans" summarily support every action by same. )
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To: aspasia; Liz; Red Badger; SunkenCiv; Lazamataz; Kaslin; BenLurkin
From

https://www.goodrx.com/insurance/fsa-hsa/hsa-excess-contribution

“What is an HSA excess contribution?
Each year, the IRS sets a limit on how much you can contribute to your HSA. An HSA excess contribution is any amount that you deposit in your account over the annual contribution limit.

Your maximum HSA contribution depends on how many months of the year you were HSA-eligible, your age, and the type of HSA you have. And this amount typically increases each year to account for inflation.

For example, the individual HSA contribution limit for 2024 is $4,150. And the family HSA contribution limit is $8,300. These limits are increasing to $4,300 for individual HSAs and $8,550 for family HSAs in 2025. The IRS also allows you to contribute an extra $1,000 — also known as a catch-up contribution — to your account every year if you are 55 or older.

GoodRx icon
EXPERT PICKS: WHAT TO READ NEXT
Make the most of your health savings account (HSA). Here are some HSA benefits that you can take advantage of this year.
Qualified medical expenses: You might be surprised to learn that you can use your HSA to pay for these qualified medical expenses tax-free.
HSAs vs. flexible spending accounts (FSAs): While HSAs and FSAs both allow you to pay for qualified medical expenses tax-free, there are a few differences you should consider.
So let's say you are over 55 years old and you contribute $6,000 to your individual HSA in 2024. Assuming you were eligible to contribute the maximum amount for the year, you will have an excess contribution of $850.

But not everyone is eligible to contribute the maximum amount to their HSA for the year. You can only contribute for the months you were enrolled in a qualified high-deductible health plan (HDHP). If you change your insurance coverage to a plan that's not HSA-eligible, you can no longer contribute money to your account. However, you can still use the existing funds in your account to pay for qualified medical expenses.

Is there a penalty for exceeding HSA contribution limits?
Yes, there is a penalty for exceeding the annual HSA contribution limit. This penalty is known as an excise tax. The IRS imposes excise taxes to discourage certain behaviors, such as making excess contributions.

4 posted on 02/20/2025 3:42:22 PM PST by Robert A Cook PE (Method, motive, and opportunity: No morals, shear madness and hatred by those who cheat.)
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To: Darksheare; Liz; Red Badger; SunkenCiv

Oh. And if you “dare ever receive” Medicare or begin Social Security?
Your HSA is frozen.
No more contributions.
Ever.

If you ever dare to die after your spouse passes away?
Your HSA is taxed. Then goes undirected and unassigned into your estate.
(Or, it goes to the state. )


5 posted on 02/20/2025 3:45:49 PM PST by Robert A Cook PE (Method, motive, and opportunity: No morals, shear madness and hatred by those who cheat.)
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To: Robert A Cook PE

Don’t have a HSA. Medicare/Tricare Life.


6 posted on 02/20/2025 3:48:16 PM PST by GailA (WELCOME BACK JESUS, PRESIDENT TRUMP & FLOTUS MELAINIA.)
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To: Robert A Cook PE

If President Trump would rescind ALL WAIVERS AND EXCLUSIONS from the Affordable Care ACt, CONgress would be forced to enroll in it, then it will be fixed.

when Trump threatened this the last time, the repealed the individual mandate almost overnight.


7 posted on 02/20/2025 3:53:52 PM PST by eyeamok
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To: Robert A Cook PE

Same thing happens if you contribute too much into IRA. You get penalized.


8 posted on 02/20/2025 4:04:51 PM PST by Bobbyvotes (I am in mid-80's and I am not gonna change my opinions.)
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To: GailA

My sympathies.
(We got out of military “health care” as soon as possible. Never looked back.)


9 posted on 02/20/2025 4:06:40 PM PST by Robert A Cook PE (Method, motive, and opportunity: No morals, shear madness and hatred by those who cheat.)
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To: Robert A Cook PE

I’ve started to draw down the balance in my HSA. Looks like I started at the right time.


10 posted on 02/20/2025 4:25:25 PM PST by MayflowerMadam (It's hard not to celebrate the fall of bad people. - Bongino)
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To: eyeamok

Give congress a choice. They either have to go in the ACA or they have to go on VA medical. No option for any other insurance. Betcha both would be fixed immediately.


11 posted on 02/20/2025 4:27:42 PM PST by RainMan ((Democrats ... making war against America since April 12, 1861))
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To: RainMan; Lazamataz; Red Badger; LS

Oooooh.
You are nasty if you require that Congress has to use the VA!


12 posted on 02/20/2025 4:30:27 PM PST by Robert A Cook PE (Method, motive, and opportunity: No morals, shear madness and hatred by those who cheat.)
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To: Robert A Cook PE; RainMan

Make it their ONLY choice.


13 posted on 02/20/2025 5:25:43 PM PST by Darksheare (Those who support liberal "Republicans" summarily support every action by same. )
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To: RainMan

I can live with that compromise


14 posted on 02/20/2025 5:39:39 PM PST by eyeamok
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