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CoastMath limits HSA contributions by the coverage you declare for each person and month, deducts them from federal taxable income, and grows the balance untaxed. A withdrawal is tax-free up to the year’s modeled qualified medical costs; anything beyond that is taxable income, plus a 20% additional tax on the share of the year before 65.
- Self-only coverage
- $4,400
- Family coverage
- $8,750
- Shared by spouses
- Catch-up from age 55
- $1,000
- Per person, not indexed
- Minimum plan deductible
- $1,700 / $3,400
- Self-only / family
You declare eligibility as HSA periods: for each person, a range of years, the coverage (self-only high-deductible plan, family plan, or not eligible) and the eligible months within each year. CoastMath then applies:
- Monthly proration. The base limit and the catch-up each accrue one-twelfth per eligible month.
- One family limit. In a month when either spouse has family coverage, the family limit is shared between both spouses’ HSAs. Each person’s catch-up can go only into their own HSA.
- Employer money counts. Employer contributions use the same limit, after your own contributions that year.
- Indexing. After 2026, the base limits grow with plan inflation; the $1,000 catch-up stays fixed, as in law.
| Self-only limit, 6 of 12 months$4,400 × 6 ÷ 12 | $2,200 | |
|---|---|---|
| + | Catch-up, 6 of 12 months$1,000 × 6 ÷ 12 | $500 |
| = | Contribution limit for the year | $2,700 |
| Family limit | $8,750 | |
|---|---|---|
| + | Your catch-up | $1,000 |
| + | Partner’s catch-up | $1,000 |
| = | Household limit | $10,750 |
| − | Contributed to your HSA | $7,750 |
| = | Room left in your partner’s HSA$2,000 of family limit + their own $1,000 catch-up | $3,000 |
With no HSA period for a year, each owner gets the self-only limit plus the catch-up from 55, every year, and a warning says eligibility is unspecified. If Health coverage enrolls that owner in Medicare, contributions stop from the enrollment month, and the enrollment year’s limit is prorated to the months before it. A family limit is never inferred from marriage, and a partner’s catch-up needs the partner’s birth date.
| Contribution | Federal income tax | Payroll taxes | California |
|---|---|---|---|
| Payroll, section 125 salary reduction | Excluded | Excluded | Taxed |
| Payroll, direct or funding unknown | Deducted | Taxed | Taxed |
| Surplus rule after spending | Deducted | Taxed | Taxed |
| Employer contribution | Excluded | Excluded | Taxed |
California doesn’t follow the federal HSA rules, so CoastMath adds every HSA contribution back to California income for a resident. Other states follow the federal treatment in CoastMath.
Because contributions lower adjusted gross income, they also lower the income used for the premium tax credit and, two years later, for Medicare surcharges. Growth inside the account is never taxed federally.
The payroll funding choice is Employee HSA funding on each HSA period; Payroll deductions and pre-tax benefits covers its effect on pay.
Each year, CoastMath totals the qualified medical costs it models for the household under Health coverage:
- Medicare premiums: Part A, Part B, Part D plans and income-related surcharges.
- Out-of-pocket and itemized medical budgets.
- Long-term care costs, after the covered share.
Marketplace premiums don’t qualify, and neither does the Medigap or Advantage premium field, because it may hold a Medigap premium. When an HSA is in your withdrawal order, its withdrawals reimburse the remaining qualified costs first, tax-free. Beyond them, a withdrawal is taxable income, and before 65 it also owes the 20% additional tax, which CoastMath pays out of the withdrawal.
Taxable HSA withdrawal=HSA withdrawal−Qualified medical costs not yet reimbursed this year
| Qualified medical costs this yearReimbursed tax-free | $8,000 | |
|---|---|---|
| + | Taxable withdrawal$4,000 still needed ÷ (1 − 20%) | $5,000 |
| = | Total withdrawn | $13,000 |
| − | 20% additional tax | $1,000 |
| = | Cash for spending | $12,000 |
The $5,000 is also ordinary income on that year’s return. The same need at 66 withdraws $12,000, of which $4,000 is taxable and no additional tax applies.
The additional tax is prorated by month in the year you turn 65: it applies to the share of withdrawals made before your 65th-birthday month.
Age
Contributions stop at Medicare enrollment when you mark those months as not eligible, or when Health coverage models Medicare and no HSA period is entered.
Show data
| Rule | From age | Until age |
|---|---|---|
| Contributions while eligible | 40 | 65 |
| $1,000 catch-up | 55 | 65 |
| Non-medical withdrawals: income plus 20% | 40 | 65 |
| Non-medical withdrawals: income only | 65 | 90 |
An HSA has no required distributions. After 65, Medicare premiums keep qualifying, so an HSA in the withdrawal order can pay them tax-free for as long as the balance lasts; see Medicare premiums and IRMAA.
When a partner dies, their HSA passes to the surviving partner and keeps its tax treatment; see When a partner dies. At the end of the plan, a remaining HSA balance is counted with traditional IRA and 401(k) balances as income your heirs will owe tax on at the heir tax rate you set, unless a partner survives; see Estate tax and net estate.