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What Happens If My HSA Contributions Go Beyond IRS Limits?

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The IRS sets a limit for how much you can contribute to your HSA each year. What happens if your contributions go over the limit?

You can accept HSA contributions from any source, not only your employer. As a result, it can get tricky to keep track of all the contributions going into your account each year. Unfortunately, sometimes contributions go over the annual limit and the IRS can assess tax penalties to your account if you don't fix them.

Because different limits apply to individuals and families in different circumstances, Horizon is not able to automatically determine when you've made an excess contribution. As a result, you are responsible to managing your account and tracking contributions. 

What are the current IRS HSA contribution limits?

The table below displays the current HSA contribution limits. Current contribution information can be found on the U.S. Department of Treasury website at treas.gov.

Tax Year Individual Coverage Limits Family Coverage Limits
2023  $3,850  $7,750 
2024 $4,150 $8,300

Once age 55, members can contribute an additional $1,000 towards their HSA (either individual and family coverage). 

What are the overcontribution penalties?

Any contributions over the IRS’s annual limit are excess contributions. The IRS imposes a 6% tax on those excess contributions when you file your taxes for the year, and also a 6% tax every year on the interest gains associated with the excess contribution.

Can I fix my overcontribution and avoid penalties?

If excess contributions have already been made, you won’t pay a 6% tax on the excess amount if you:

  • Withdraw the excess contributions by the due date of the tax return and
  • Withdraw any earnings on the withdrawn contributions and include the earnings in “other income” on the tax return for the year

If your employer has already created your W-2, you can work with your employer to adjust your W-2 to reflect your new HSA balance once you've withdrawn the excess funds.

To withdraw the excess contribution:

  1. Sign in at www.horizonblue.com and click My Accounts. In the top right corner, click Horizon MyWay, and then go to your account.
  2. Click Get Reimbursed.
  3. Enter the amount to withdraw from your HSA
  4. Fill out the information requested, and for "distribution reason" select Excess Contribution Removal
  5. Click Submit 

It can be difficult to identify exactly when you went over the limit and how much income you earned on the excess contributions. To help ensure you withdraw the accurate amount of both your contributions and your earnings from the contributions, call Horizon customer support at 1-888-215-0025, 8 a.m. to 9 p.m. Eastern Time, Monday through Friday and we can help.