What happens when HSA contributions exceed the amount that may be deducted or excluded from gross income (excess contributions)?

The total of all HSA contributions made by an individual, an employer, or anyone else that exceeds the accountholder’s annual contribution limit, is called an “excess contribution.” Generally, an accountholder pays a six percent excise tax each year the excess remains in the account. Excess contributions are not tax deductible for the accountholder or for their employer. UMB’s system will not allow an HSA to go over the annual family maximum, plus catch-up contribution, but an accountholder’s annual contribution limit may be less than this amount based on coverage type, age and eligible months of the year.

It is the accountholder’s responsibility to track and limit contributions to their annual contribution limit. If an accountholder over contributes to their HSA, the excise tax may be avoided if the excess contribution amount is removed from the HSA, together with any earnings attributable to the excess contribution, before the due date for filing the individual’s federal income tax return, including extensions, for the year in which the excess contribution was made.