Why am I not eligible for an HSA?
Asked by: Prof. Cielo Conroy I | Last update: October 3, 2025Score: 4.9/5 (53 votes)
What disqualifies you from having an HSA?
If you can receive benefits before that deductible is met, you aren't an eligible individual. Other employee health plans. An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses can't generally make contributions to an HSA.
Why would I not be eligible for HSA?
You have secondary coverage that is non-HSA compatible. If you are covered by a qualified HDHP and also have secondary coverage through your spouse's health plan that does not meet the minimum requirements for an HDHP, you would not be eligible to establish a new HSA or make contributions to a current HSA.
How do you become ineligible for HSA?
- Your spouse or domestic partner has a general purpose FSA/HRA. ...
- You switch to a non-HDHP plan midyear. ...
- You receive treatment at an Indian Health Services (IHS) or Veteran's Affairs (VA) facility. ...
- You enroll in Medicare or Medicaid. ...
- Your employer offers an onsite clinic where you work.
Why aren't HSAs available to everyone?
HSA-eligible plans are limited because they must meet strict IRS guidelines, including specific deductible and out-of-pocket maximums. Insurers may prioritize other plan types to meet broader market demands. Their higher cost could stem from differences in network options or additional benefits.
Not Eligible for an HSA or a Roth IRA – What's the Next Step?
Why is my HSA being declined?
Reasons for Declined HSA/FSA Transactions
There are several reasons why your client's HSA/FSA cards are declined, including: Insufficient funds. Funds have expired or do not roll over. Card has not been activated / set up by the client for utilization.
How do I know if I'm eligible to contribute to an HSA?
To be an eligible individual and qualify for an HSA, the taxpayer must meet the following requirements: Be covered by a high-deductible health plan (HDHP) on the first day of the month. Not be covered by other health insurance (see Publication 969 for exceptions)
Who determines what is HSA-eligible?
The health plan determines eligibility for a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA).
Who cannot have a health savings account?
You can't contribute to an HSA if you have Medicare coverage, or a plan that pays its share of a covered service without you having to pay deductibles or copayments first (called “first dollar coverage”).
What is the 12 month rule for HSA?
It means you must remain eligible for the HSA until December 31 of the following year. The only exceptions are death or disability. If you violate the testing period requirement, your ineligible contributions become taxable income.
Why is my high-deductible plan not HSA-eligible?
HSA-qualified HDHPs must have a higher annual deductible than regular individual health insurance plans, a maximum limit on annual deductible and medical costs, and offer no insurance coverage until the plan participant reaches the deductible.
What is the downside of an HSA?
Drawbacks of HSAs include tax penalties for nonmedical expenses before age 65, and contributions made to the HSA within six months of applying for Social Security benefits may be subject to penalties. HSAs have fewer limitations and more tax advantages than flexible spending accounts (FSAs).
What is the penalty for ineligible HSA contributions?
5. What happens if I contribute more than the IRS annual maximum? 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. It is recommended you speak with a tax advisor for guidance.
Why would you not get an HSA?
HSAs might not make sense if you have some type of chronic medical condition. In that case, you're probably better served by traditional health plans. HSAs might also not be a good idea if you know you will be needing expensive medical care in the near future.
What would disqualify your client from an HSA deduction?
You also cannot contribute to an HSA if you have disqualifying additional medical coverage, such as a general-purpose health flexible spending account (FSA), at the same time.
What proof do I need for HSA?
For FSAs, HSAs, and some HRAs, a detailed provider receipt or itemized cash register receipt is usually sufficient, if it contains all the required information listed above. For some HRAs, an Explanation of Benefits (EOB) from your insurance company is required.
What makes you ineligible for HSA contributions?
No Disqualifying Coverage. To be eligible for HSA contributions, an individual generally cannot have health coverage other than HDHP coverage. This means that an HSA-eligible individual cannot be covered under a health plan that provides coverage below the HDHP minimum annual deductible.
What is not HSA-eligible?
Nutritional supplements and weight loss programs not prescribed by a physician are examples of expenses that would not be covered by your HSA. Surprise! You can use your HSA to fund big bills, like braces. It can also help cover routine dental needs, like cleanings and fluoride treatments.
Can I use HSA for dental?
Your HSA also covers expenses for standard dental cleanings and dental check-ups. One thing to keep in mind is that some of these procedures may have a co-payment, so it's important that you check with your dental insurance provider to find out exactly what you'll have to pay out of pocket.
Are gym memberships HSA-eligible?
Gym memberships. While some companies and private insurers may offer discounts on gym memberships, you generally can't use your FSA or HSA account to pay for gym or health club memberships. An exception to that rule would be if your doctor deems fitness medically necessary for your recovery or treatment.
Is HSA based on income?
There are no income limits; however, you do need to be enrolled in a High Deductible Health Plan (HDHP) and meet several other requirements to qualify for an HSA.
Are condoms HSA-eligible?
Condoms are eligible for reimbursement with flexible spending accounts (FSA), health savings accounts (HSA), and health reimbursement accounts (HRA). They are not eligible for reimbursement with dependent care flexible spending accounts and limited-purpose flexible spending accounts (LPFSA).
What makes a plan eligible for HSA?
What's considered an HSA-eligible plan? Under the tax law, HSA-eligible plans must set a minimum deductible and a limit, or maximum, on out-of-pocket costs for both individuals and families. The minimum deductible is the amount you pay for health care items and services per year before your plan starts to pay.
Can you use HSA for massage?
Your HSA can pay for massage therapy, though you'll likely need a letter of medical necessity (LMN) from your doctor. An LMN states what condition the treatment is for, how many sessions you need, and any other relevant details. An HSA may also be used on alternative or holistic treatments, such as: Massage therapy.
What are the restrictions for HSA?
You generally can't use HSA funds to pay premiums. Once you turn 65, you can use the money in your HSA for anything you want. If you don't use it for qualified medical expenses, it counts as income when you file your taxes. Six months before you retire or get Medicare benefits, you must stop contributing to your HSA.