An eligible individual who is 55 years or older at the end of his tax year can make additional catch-up contributions to his Health Savings Account (HSA). The U.S. Internal Revenue Service (IRS) states that an individual can qualify for an HSA if he is covered by a high deductible health plan, he has no other health coverage except what is permitted by the IRS, he does not participate in Medicare and he is not claimed as a dependent on someone else's tax return.
Health Spending Accounts
An HSA is a tax-exempt account that a qualified individual can set up with a trustee to make payments for certain medical expenses. A bank, insurance company or any other IRS-approved trustee can help establish an HSA. Employers' benefits departments typically know which trustees are available for HSAs in their areas.
HSAs enjoy tax-privileged statuses, as contributions made by an employer are excluded from an HSA owner's gross income. Also, an HSA owner can claim a tax deduction for contributions made by anyone, other than his employer. HSA contributions never expire, and interest and any other investment income are exempt from federal taxation. Distributions from an HSA can be also tax-free, provided that the owner spends the funds on qualified medical expenses. Finally, an HSA can be ported when an HSA owner changes employers or retires.
In 2015, the IRS established an annual contribution limit of $3,350 for an individual with an HSA. The catch-up contribution for HSA owners of 55 years or above is $1,000. The annual contribution limit is typically adjusted by the IRS for changes in the cost of living in the United States.