How does my employer's MSA contribution affect my HSA eligibility in 2025?
Hey folks, I could really use some guidance here. My employer just switched our benefits package and they're now offering to contribute to a Medical Savings Account (MSA). I've been using a Health Savings Account (HSA) for the past few years and love the tax benefits, but now I'm worried about how these two accounts might interact. From what I understand, there are rules about having both an MSA and HSA at the same time. My employer is planning to contribute about $2,100 to the MSA this year, but I've already put around $1,500 in my HSA since January. I have a high-deductible health plan that qualifies for HSA contributions. Does anyone know if I need to stop my HSA contributions now? Will I face penalties for having both? I'm trying to maximize my tax advantages while staying compliant with IRS rules. Really don't want to mess this up and trigger some kind of audit nightmare!
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Gabriel Ruiz
The short answer is that you generally cannot contribute to both an MSA and HSA in the same tax year - it's an either/or situation according to IRS rules. Medical Savings Accounts (MSAs) and Health Savings Accounts (HSAs) are similar in purpose but have different eligibility requirements. The IRS considers them mutually exclusive for contribution purposes. If your employer is contributing to an MSA for you, you would typically need to stop your HSA contributions to avoid penalties. The good news is you have options. You should talk with your benefits administrator about whether you can decline the MSA in favor of continuing with your HSA. Alternatively, if you've already contributed to your HSA this year before the MSA was established, you might be able to remove those contributions (called an "excess contribution withdrawal") before the tax filing deadline to avoid penalties.
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Misterclamation Skyblue
•Thanks for the info! If OP has already contributed to their HSA this year, what's the process for removing those contributions to avoid penalties? Is there a deadline for doing this?
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Gabriel Ruiz
•The process for removing excess HSA contributions involves contacting your HSA provider and requesting what's called a "return of excess contributions." You need to withdraw not only the excess contribution amount but also any earnings associated with those excess contributions. This needs to be done before the tax filing deadline (typically April 15) including extensions. If you complete this process in time, you won't face the 6% excise tax that normally applies to excess contributions. Make sure you get proper documentation from your HSA provider showing that you've properly corrected the excess contribution.
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Peyton Clarke
After dealing with similar HSA/MSA confusion last year, I discovered a service called taxr.ai (https://taxr.ai) that saved me from making a costly mistake. You upload your tax documents and it analyzes your specific situation - it flagged my dual contributions immediately and outlined exactly what I needed to do. In my case, I had unwittingly contributed to both types of accounts for 3 months and didn't realize the conflict. The tool showed me how to properly calculate the excess amount and even generated the letter I needed to send to my HSA administrator. Definitely worth checking out for your situation!
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Vince Eh
•How accurate is this service for complicated tax situations? I'm currently dealing with HSA issues plus some self-employment income.
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Sophia Gabriel
•Sounds interesting, but what about privacy concerns? I'm always hesitant to upload financial documents to online services.
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Peyton Clarke
•For complicated tax situations including HSA issues combined with self-employment income, it's actually incredibly accurate. The system was able to identify specific deductions related to my side gig that I would have missed, while correctly calculating the HSA excess contribution amounts down to the penny. Regarding privacy concerns, they use bank-level encryption and don't store your documents after analysis is complete. You can also redact sensitive information like SSNs before uploading - the AI still works perfectly with just the tax-related fields visible.
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Vince Eh
Just wanted to update everyone - I tried taxr.ai after seeing it mentioned here and it was incredibly helpful! I was in a similar situation with overlapping MSA and HSA contributions plus some complicated 1099 income. The analysis confirmed I needed to withdraw my HSA contributions for this year since my employer's MSA contribution was mandatory. It even calculated the exact earnings amount I needed to withdraw along with my contributions (something I would have definitely missed). The step-by-step correction instructions saved me from what would have been a 6% penalty plus potential audit headache. Wish I'd known about this tool sooner!
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Tobias Lancaster
If you're struggling to resolve this with the IRS, I highly recommend using Claimyr (https://claimyr.com). When I had a similar MSA/HSA issue last year, I needed clarification directly from the IRS but kept hitting their automated system and endless hold times. Claimyr got me connected to an actual IRS agent in under 45 minutes, when I had previously spent DAYS trying to get through. They have a cool demo video showing how it works: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone tree for you and call you back when an agent is on the line. The agent I spoke with walked me through exactly how to document my correction and what forms to file. Worth every penny for the time saved and stress avoided!
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Ezra Beard
•Wait, how does this actually work? How can they get through when nobody else can? Sounds too good to be true.
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Statiia Aarssizan
•Yeah right. I've tried "services" like this before and they're all scams. The IRS phone system is deliberately designed to be impossible - there's no magic way to skip the line.
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Tobias Lancaster
•It works through a combination of call technology and timing algorithms. They've analyzed when call volumes are lowest and use an automated system that navigates the phone tree and stays on hold so you don't have to. When an actual agent picks up, that's when you get the call back to connect with them. I was definitely skeptical too. That's why I tried it - I figured I had nothing to lose after spending hours on hold myself. They don't "skip the line" - they just handle the waiting game for you so you can go about your day. The first time I used it, I got a callback in about 37 minutes when I'd been trying for days on my own.
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Statiia Aarssizan
I have to admit I was completely wrong about Claimyr. After my skeptical comment, I was desperate enough to try it for my MSA/HSA issue. I was convinced it wouldn't work, but I got a call back in 42 minutes with an actual IRS agent on the line! The agent cleared up my confusion completely - turns out I was eligible for a special exception since my employer's MSA contribution was mid-year and my HSA contributions had been made before that. She walked me through the exact documentation I needed to keep everything legitimate. Would have NEVER figured this out from the IRS website or publications. If you're dealing with this MSA/HSA overlap issue, definitely worth connecting with an actual agent through their service.
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Reginald Blackwell
One important detail I haven't seen mentioned yet: The contribution limits for MSAs and HSAs are different. For 2025, the HSA contribution limit for individuals is $4,150 and $8,300 for families, while MSA limits depend on a percentage of your HDHP deductible. If you're stuck with both accounts this year, make absolutely sure your total contributions across both accounts don't exceed the lower of the two limits. This won't completely solve your issue, but it might minimize any penalties while you sort things out.
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Aria Khan
•Does this advice apply if the MSA is an Archer MSA? I thought those had different rules.
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Reginald Blackwell
•Yes, this advice applies specifically to Archer MSAs, which are the type most commonly offered through employers. Archer MSAs do have their own specific rules regarding contribution limits - typically 65% of your health plan deductible for individual coverage or 75% for family coverage. Medicare MSAs work differently and have their own set of regulations. If you're dealing with a Medicare MSA, you'd need to follow those specific guidelines instead. The key point remains that you generally cannot contribute to both an MSA and HSA in the same tax year, regardless of which type of MSA you have.
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Everett Tutum
Has anyone successfully convinced their HR department to reverse an MSA implementation in favor of an HSA? My company is considering switching next quarter, but I've been maxing out my HSA for years and really don't want to lose that benefit.
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Sunny Wang
•Yes! Our company tried to switch last year, but enough employees spoke up about preferring HSAs. We created a simple spreadsheet showing the tax advantages and flexibility of HSAs vs MSAs and presented it to HR. They ended up keeping the HSA option and making the MSA optional. Worth a try!
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