HDHP Rules For Deductible Carry-Over

Can you have a health savings account carryover with a high deductible health plan? Read on to find out in our latest Q&A.

Question

Our company has a high deductible health plan (HDHP). Employees electing this plan can also contribute to health savings accounts (HSAs). Are there any rules against the HDHP having a three-month deductible carry-over?

Answer

An HSA-compatible HDHP may include a deductible carryover provision. In that case, the minimum required annual deductible that would apply to a 12-month plan year must be increased to account for crediting expenses incurred over more than 12 months.

For instance, the minimum required annual deductible for the 12-month plan year beginning in 2019 will be $1,350 if self-only coverage or $2,700 if family coverage. If the plan allows expenses incurred in the last three months of the 2018 plan year to count toward the 2019 plan year’s deductible, then the minimum required annual deductibles will be $1,687.50 and $3,375. That is, the minimum required annual deductible amounts are 25% higher because the deductible accumulation period (15 months) is 25% longer than 12 months. If the plan had a six-month deductible carryover provision, the minimum required annual deductibles would have to be increased by 50%.

This blog is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.