Maximizing HSA Contributions: A Yearly Checklist

This checklist turns HSA best practices into a simple annual routine so your HSA captures tax savings today and grows into a meaningful retirement-health asset tomorrow. I’ve used these steps in client work for more than a decade; they keep contributions efficient, compliant, and aligned with short- and long-term health costs.

Note: HSA contribution limits change annually. The IRS updates limits each year (for example, 2024 limits were $4,150 for individual coverage and $8,300 for family coverage; catch-up contributions remain $1,000 for individuals 55+). Always confirm the current year limits at the IRS (see IRS Publication 969) before finalizing contributions (IRS Pub. 969: https://www.irs.gov/publications/p969).

Quick links (internal resources)

Yearly HSA checklist (month-by-month and event-driven)

1) January — confirm eligibility and open or review your HSA

  • Verify you’re covered by a qualifying High-Deductible Health Plan (HDHP) and aren’t enrolled in Medicare or claimed as a dependent (see Healthcare.gov glossary: https://www.healthcare.gov/glossary/health-savings-account-hsa/).
  • If you don’t have an HSA, open one early in the year. The sooner you start, the more time your cash or investments have to grow.
  • If you already have an HSA, review custodial fees, investment options, and interest/yield tiers. In my practice, moving a client to a lower-fee custodian freed up hundreds of dollars a year for investments.

2) January–February — set contribution targets and payroll elections

  • Pick a contribution plan: monthly payroll deduction, automatic bank transfers, or lump-sum contributions.
  • Decide whether to front‑load (larger early contributions) or dollar‑cost average. For many clients, steady payroll deductions reduce the behavioral risk of undersaving; front‑loading may work if you want more time in the market.
  • If your employer offers pre-tax payroll contributions, elect that option—it’s effectively the same tax benefit for federal taxes and avoids the need to claim the deduction on your return.

3) March–April — confirm prior-year contributions and tax reporting

  • Reconcile prior-year HSA contributions against Form W-2 (Box 12 code W) and Form 5498-SA or your HSA statements.
  • File Form 8889 with your tax return to report contributions and distributions (see IRS Pub. 969 and Pub. 502 for qualified medical expenses).
  • If you overcontributed last year, remove excess contributions before the tax filing deadline to avoid a 6% excise tax.

4) Ongoing — track qualified medical expenses and save receipts

  • Keep digital or paper copies of receipts for HSA-qualified expenses. Although you don’t attach receipts to your tax return, you must substantiate withdrawals if audited.
  • Consider paying out-of-pocket for current qualified expenses and preserving HSA receipts so you can reimburse yourself tax-free later. This is a common long-term strategy I use with clients who want the HSA to grow tax-free.

5) Mid-year review — adjust for life or income changes

  • If you switch between individual and family HDHP coverage, change jobs, or enroll in Medicare, your HSA eligibility or contribution limit changes mid-year. Recalculate pro-rated limits.
  • If you get a raise, bonus, or big medical bill, revisit your contribution rate. Increasing deferrals during months you have higher income can maximize tax savings.

6) Employer match optimization

  • Confirm whether your employer contributes to your HSA and whether there’s a match formula. Treat employer contributions as part of your total annual allowance toward the IRS limit.
  • If an employer match is on the table, prioritize capturing the full match before directing additional dollars elsewhere—this is effectively free return on your contributions.

7) Age 55+ catch-up contributions

  • If you’re 55 or older, make the additional $1,000 catch-up contribution allowed by the IRS. Use payroll withholding or direct contributions to ensure you hit the extra amount.

8) Investment strategy and allocation review

  • If your HSA balance is above your cash cushion (commonly one-six months’ out-of-pocket exposure), move a portion into the HSA’s investment options—index funds or conservative allocations depending on risk tolerance. See our guide: HSA Investment Options.
  • Rebalance annually or after significant market moves. I recommend treating HSA investments like other retirement accounts—asset allocation should match your time horizon for medical spending.

9) Year-end — final contribution push and excess-check

  • In December, review contributions to ensure you’re on track to use the full annual limit (if that’s your goal) without exceeding it.
  • Remember you can still make prior-year contributions up until the tax deadline (typically April 15) if you missed earlier deposits—confirm with your HSA custodian and the IRS.
  • Check for excess contributions and correct them promptly to avoid excise taxes.

10) Beneficiary, recordkeeping, and estate planning

  • Update HSA beneficiary designations after life events (marriage, death, divorce). HSAs pass differently depending on whether the beneficiary is a spouse or non-spouse—this can create taxable events.
  • Keep records: contribution confirmations, 5498-SA, distributions, receipts for expenses, and account statements. These simplify tax filing and protect you in an audit.

Common traps and practical fixes

  • Underfunding because you underestimate annual medical costs: use last year’s out-of-pocket totals as a baseline, then add buffer for likely events.
  • Ignoring employer contributions: actively confirm and claim them; many employees assume employer contributions are automatic.
  • Losing paperwork: scan and store receipts in a dated folder or secure cloud drive labeled “HSA receipts.” I recommend keeping records for at least seven years.
  • Mixing HSA rules with FSAs or Medicare: coordination rules matter. If you plan to enroll in Medicare, stop HSA contributions by the month Medicare coverage begins. For guidance on coordinating accounts, see our coordination guide: Strategic Use of HSAs and Medicare Coordination.

How to handle an excess contribution

  • Withdraw the excess and any earnings before the tax filing deadline for that year. The removed earnings are taxable, and you’ll avoid the 6% excise tax if corrected on time.
  • If you don’t correct the excess, you’ll face a 6% excise tax per year on the excess amount until corrected.

Example annual plan (practical)

  • January: Open HSA or confirm custodian; set payroll election for automatic monthly deposits.
  • February–November: Reconcile monthly deposits, enable employer contribution match, set investments for balances above $2,000.
  • December: Final review; execute any last contributions to reach your annual target.
  • January–April (tax season): Confirm W-2 code W, file Form 8889, correct any overcontributions.

Final tips from practice

  • Treat the HSA like a retirement account: pay qualified medical expenses out-of-pocket now, preserve HSA receipts, and reimburse yourself decades later when you might be in higher medical need.
  • Low-fee custodians and simple index funds compound more effectively than high-fee options. In my experience, fee savings and consistent investing often outrank timing attempts to chase market gains.
  • Use the HSA for predictable recurring costs (medications, copays) and invest the remainder for long-term growth.

Authoritative sources and further reading

Professional disclaimer: This article is educational and does not replace personalized tax or financial planning advice. Consult a qualified tax advisor, CPA, or financial planner for advice tailored to your situation.

If you want, I can convert this checklist into a one-page printable planner or a calendar of monthly reminders tailored to your filing year and whether you have individual or family coverage.