PF Blog

VA Medical Benfits and HSA

Since leaving my last job and becoming a 1099 contractor, I have returned to the VA system as a veteran with a service connected disability rating.  The biggest bummer about not having to have insurance was the potential loss of an HSA contribution.

HSA contributions are the triple tax free gift from the government to anyone, but most potent for earners who are phased out of other plans.

From IRS:

A-5.  An otherwise eligible individual who is eligible to receive VA medical benefits, but who has not actually received such benefits during the preceding three months, is an eligible individual under section 223(c)(1). An individual is not eligible to make HSA contributions for any month, however, if the individual has received medical benefits from the VA at any time during the previous three months.

So, as long as you have not received care in the previous 3 months, you can make a full annual contribution to your HSA without penalty.  This is great for healthy people.

The other option under consideration was going with the cheapest HDHP to enable the HSA, however the cost of HDHP would likely overcome any potential savings of the HSA.