Excess Contributions

When you contribute too much to your health savings account (HSA)


What is an excess contribution?

Contributing more to your health savings account (HSA) than the IRS limit for the tax year creates an excess contribution. All excess contributions are subject to income tax and a 6% excise tax each year until corrected.


What are the IRS limits?

The amount you can contribute to an HSA is set by federal regulations and is adjusted annually for inflation—find out the exact amount.

These limits are the combined total of IU’s contributions, your contributions to your HSA, your spouse’s contributions to their own HSA (if applicable), and contributions made to an Archer MSA (if applicable). These maximums can be further affected by the number of months you are covered under an HDHP.

Common situations that lead to excess contributions

  • You change employers mid-year, and the combined contributions exceed the statutory limit
  • You make contributions directly to the HSA outside of payroll, and the combined contributions exceed the statutory limit
  • You and your spouse’s contributions exceed the combined family limit
  • You changed from family coverage level to employee-only coverage level mid-year and your contributions exceed the pro-rated statutory limit
  • You enrolled in Medicare mid-year and your contributions exceed the pro-rated statutory limit
  • You switched in or out of a high deductible health plan (HDHP) mid-year and your contributions exceed the pro-rated statutory limit

What to do if you make excess contributions

Ineligible or excess contributions in your HSA — and any earnings on those contributions — are subject to income taxes and a 6% excise tax for each year they remain in your account.

You’re encouraged to speak with a tax advisor for guidance in this situation. However, you can generally take one of the following actions to correct the issue:

Option 1: Remove the excess contributions and earnings.

This option avoids the 6% excise tax altogether if completed before the tax deadline.

  • Calculate your excess contribution amount.
  • Submit an HSA Distribution Form to WEX requesting a return of the excess contributions. You should submit your request no later than one month before the tax filing deadline to allow time for processing.
  • WEX will return the excess contributions to you by check or direct deposit. You’ll owe income tax on these funds, but not the excise tax.

Option 2: Leave the excess contributions in your account.

You can leave the excess contributions in your account, but you’ll owe income tax and a 6% excise tax until they’re either:

  • Withdrawn as a “return of excess contribution” (option 1 above), or
  • Applied toward your contribution limit in a future year.

Questions regarding the HSA distribution request process should be directed to WEX at IUSupport@wexinc.com or at +1-800-284-8412, option 1.

Calculating your prorated IRS maximum

HSA contribution limits are determined on a tax year basis.  If you are not eligible for all 12 months, then IRS rules state that your contribution limit must generally be prorated by the number of months you are eligible to contribute to an HSA.

Your eligibility is based on your coverage status on the first day of the month.

Use the following worksheets to calculate your personal limit for the tax year:

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