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.

The IRS maximums are the combined total of IU 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 you need to do if you make an excess contribution

If your HSA contains excess or ineligible contributions you will generally owe the IRS a 6% excess-contribution penalty tax for each year that the excess contribution remains in your HSA.

We recommend you speak with a tax advisor for guidance.

You can take one of the following additional actions:

  • Complete an HSA Distribution Request Form and return it to WEX by December 31st. The excess amount will be removed from your account and refunded to you. You will need to claim the excess contributions on your Federal Income Tax return and pay income taxes on those contributions. However, you would avoid having to pay the 6% excise tax penalty.
  • Leave the excess contributions in your HSA and pay the excise tax on the excess contributions when filing your federal income tax return for that year. The funds would remain in your HSA and then would be able to be counted as part of your next-year contributions.
  • Plan to contribute the annual limit (or less than the annual limit) to your HSA.

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

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