I know from the comments left after I posted about setting up my HSA that some of you are interested in them.
So .... here's a little tip that I learned the hard way and that I hope will help you:
The first year you have set up an HSA, you have to pro-rate your contribution based on how long you had your HDHP.
For example, I had my HDHP for only the last 2 months of 2007, so the maximum I was allowed to contribute to my HSA (for a family) was:
$5,650 (maximum allowed 2007 contribution) / 12 months of the year x 2 months I had the HDHP = $942
But of course this did not dawn on me and I over-contributed. (Got too excited about the potential tax savings, I guess.) As MonkeyMama would say - "Doh." Rookie mistake.
Fortunately, it was not a really big deal. As soon as Turbo Tax told me I had made a "boo-boo" I contacted my HSA bank, and filled out a Distribution form for the Excess Contribution, and they sent me a check.
If you open an HSA this year, save yourself a step and pro-rate your contribtuion!
Tip for those interested in HSAs
April 18th, 2008 at 02:52 am
April 18th, 2008 at 04:30 am 1208493046
April 18th, 2008 at 12:58 pm 1208523503
April 19th, 2008 at 04:13 pm 1208621627
April 20th, 2008 at 06:49 am 1208674143
April 20th, 2008 at 03:21 pm 1208704863
You need to have a HDHP (high-deductible healthcare plan) in order to set up a HSA. Some employers offer HDHP plans as an option, and some don't. I think they are becoming more popular, so more employers may start offering them in the future.
We pay for an individual health insurance plan because my husband in self-employed. We could choose whatever type of plan we wanted, and we decided to go with the HDHP because for us it made sense to have a HSA.
April 20th, 2008 at 06:04 pm 1208714657