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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

The author is paid for product endorsements and has an ownership or other financial interest in the businesses related to the topics covered.

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Change from health savings account

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: I have had a high deductible insurance for 6 months and a HSA with it. If I cancel the insurance for another no deductible insurance what will happen to my HSA ? Will It still be able to go on my income tax at the end of the year? Can I use it to pay the premiums for the new insurance?

A: Your maximum allowable contribution and tax deduction for an HSA is based on the number of months you were enrolled in the insurance for the entire month. For example, if you had insurance from January 15 to March 15, that counts as one month of coverage. You take the total annual allowable deduction and multiply by # of months / 12. A more complete explanation can be found at or, in many cases, your insurance company will calculate the maximum deduction for you. If you use this money to pay insurance premiums then a penalty and additional income tax will be due. If you use it to cover out-of-pocket health expenses, then it is tax-free. Again, see the FAQs at for more information. This is the most complete resource available on the tax treatment of distributions.


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