Rules and Best Practices When Spouses Are Both HSA Eligible

There are several things you should be aware of if both you and your spouse are interested in selecting a High Deductible Health Plan (HDHP) in your respective workplaces and making contributions to a Health Savings Account (HSA). One would assume, as a lot of married couples do, that each of you can each contribute up to your respective IRS contribution limit as determined by your coverage.

For example, let’s say one of you has self-only coverage and the other one has family coverage. The self-only contribution limit ($3,100) plus the family contribution limit ($6,250) should make your combined contribution limit $9,350, right? Wrong.

The contribution limit is determined by the Internal Revenue Service (IRS) and the IRS views spouses as one tax unit, even if filing as “married filing separately,” so if either spouse is eligible for a family contribution limit, that is intended to cover both spouses. The IRS suggests that the family limit be split evenly between the spouses, unless a separate allocation is desired.

Therefore, if:

  • Both spouses select a HDHP and each insures one child, each of their coverage is considered family coverage, then the couple will have to share one family HSA contribution limit which is $6,250 for 2012 and $6,450 for 2013.
  • Both spouses select a HDHP and one is insured as self-only and the other one selects family coverage to include the children, then both will share the family HSA contribution limit which is $6,250 for 2012 and $6,450 for 2013.
  • Both spouses select an HDHP and self-only coverage, then they each will have a single HSA contribution limit of $3,100 for 2012 and $3,250 for 2013.

These rules raise an interesting question: should a married couple open only one HSA and not have to worry about exceeding the contribution limit by not having to compare and track two HSAs? The best practice, in most cases, is for each of you to open your own account, because this may increase your savings. If you only have one account, then one spouse could miss out on employer contributions, pre-tax contributions/reduction taxable income, and catch-up contributions if one of the spouses is 55 or older (catch-up contributions are available for each HSA holder so long as they have their own account). Employers cannot facilitate pre-tax contributions to an account not owned by the employee.

For example, Keith and Lora are married, work for different employers and both decide to participate in a HDHP with their respective employers. They decide that Lora will open an HSA and Keith will not.  Lora has family coverage to include their children, so her contribution limit is $6,250 (2012) or $6,450 (2013).  Keith has insured only himself and sees no reason to open his own account.  In this scenario, Lora is the only one that can take advantage of contributing funds to her HSA through pre-tax payroll deductions — which not only saves her federal taxes but saves her and her employer payroll taxes as well.

The main disadvantages of this strategy come in two specific scenarios.  First, if Keith reaches the age of 55 before Lora, he will forfeit the opportunity to make an additional $1,000 catch up contribution unless he has his own HSA.  Second, if Keith’s employer makes contributions to its employees’ HSAs then Keith will miss out on those funds as well.

The advantages of only opening an HSA for Lora are more minor and include: (i) only paying one set of account fees, which are often covered by the employer anyway, and (ii) only having paperwork for one account.

In conclusion, if both spouses are going to select a HDHP through their employers and are HSA-eligible, then they should probably each open their own HSA, figure out their collective contribution limit, and decide how they will split that limit between the two accounts to avoid over-contributing.

170 thoughts on “Rules and Best Practices When Spouses Are Both HSA Eligible

    • Hi Darrell,

      The answer to that question depends on a number of factors. For example:

      - Are both HDHP eligible (not covered by any other insurance, including Medicare, Tricare or an FSA)
      - Are either of you are over 55?
      - Are either of you employed by an organization that allows payroll deductions or makes contributions to an HSA?

      These factors could affect your decision. For example, if one of you is 55 or older, the IRS allows an additional $1,000 in contributions to only that person’s account. If either of you receives employer contributions or wants to make pretax payroll deductions, an account would need to be open in the name of the person who receives the employer contributions or makes pretax deductions.

      I hope that answers your question.

      Regards,
      Owen

    • If both spouses are covered under the same family HDHP offered by the employer of one of them (the other, who works p-time is not offered benes), and both are >55 y.o, it appears that the limit could be $7,450 + $1,000?

      • Hi Pablo,

        If both spouses are covered under the family HDHP and are 55+, they are each eligible for the $1,000 catch-up contribution, however, there is one stipulation to this rule. The contribution limit of $8,550 is only allowable if each spouse has a separate HSA for their respective catch-up contribution of $1,000. (I will note that the new family contribution limit for 2014 is $6,550 and not $6,450). So, the contribution limit for one spouse could be as much as $7,550, but the other spouse must open their own HSA in order to receive their individual catch-up contribution of $1,000. I hope that makes sense. Here is an excerpt from the IRS Publication 969:

        “If both spouses are 55 or older and not enrolled in Medicare, each spouse’s contribution limit is increased by the additional contribution. If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,550. Each spouse must make the additional contribution to his or her own HSA.”

        Please let me know if you have additional questions.

        Paige

  1. I have a complicated scenario: I am married, and we file jointly. In January of 2012, my husband was a student, so I covered him under my employer’s HDHP family plan. My employer contributed $1600 to my HSA (I contributed none.) I switched jobs and on Feb. 1 started on my new employer’s insurance… a non-HDHP family plan for my husband and I. Then my husband graduated and started his job July 1. He left my company’s health insurance and got one from his own company… a self-only HDHP. His employer contributed $200 to his new HSA (he contributed none.) I stayed on my own company’s insurance.

    If I calculate this correctly, my HSA contribution limit would be $520.83 ($6250/12) since I was covered under an eligible family plan for only one month. We will allocate this entire amount to me.

    My husband’s HSA contribution limit would be $1550 ($3100*6/12) since he was covered by an eligible self-only plan for the last 6 months (I know we could use the “Last month rule” and say his limit is $3100, but he will be changing jobs this year and will not meet the testing period requirement.) But his contributions only total $200. Can we allocate the rest of his $1550 limit to me, so that it will cover the entire $1600 contribution made by my employer?

    The instructions for the form are very confusing…it indicates that we can allocate the limits however we want when dealing with a family HDHP, but it doesn’t really talk about doing that with the self-only plan limit.

    • Hi Katie,

      It is not surprising that this situation would cause some confusion. Initially I’ll say that it’s always best to consult a tax adviser and it would not surprise me if they provided better insights or came to a different conclusion. While the instructions of HSA tax form 8889 do not specifically refer to the situation you are talking about, they do only mention allocating funds to either HSA when you are on a family insurance plan. For that reason, our understanding would be that you could only allocating the 520.83 to either HSA. Furthermore, the amount beyond $520.83, provided by your employer in January, should at the very least be withdrawn and treated as regular income.

      If you work with your bank to withdraw the money and they can code it as never being contributed (rather than as an excess contribution), you can treat the withdrawn amount as regular income and simply pay income and payroll taxes on the amount. You might even be able to work with your employer to make sure they correct your W-2. If the amount is treated as an excess contribution by the bank, you may have to pay the excess contribution tax on it as well.

      Regardless, I think it would be best to speak with a tax adviser since these comments should not be taken as tax advice.

      Regards,
      Owen

  2. Hi Barb,

    For the case both husband and wife are eligible for HSA, if both open HSA accounts and make contributions, then both has to pay premiums, but no extra advantages for that double premiums, most of time the premium is more than the contribution portion from employer.

    • Hi Dehong,

      Perhaps I don’t understand the concern you are raising. When people refer to premiums they are usually referring to the cost of enrolling in health insurance. Is this what you are referring to? The cost of premiums is usually a separate consideration and separate cost than opening an HSA. For example, an individual would choose their insurance first, then after selecting an HDHP, they would choose whether or not to open an HSA.

      If this is off-topic, could you clarify the concern you were raising?

  3. Hi Barb,
    My parents each have self-coverage high-deductible plans. They are both 55 years old as well. Does this allow them to take an $8,500 ‘above-the-line’ deduction? Or will it decrease to the family limit?

    Thanks!

    • Hi Thomas,

      The IRS has not issued any specific language on contribution limits for married couples who both have self only insurance. In previous years this didn’t matter because the combined amount for people with self only limits was less than the family limit. It is our interpretation that the IRS doesn’t intend to allow a loophole for couples to contribute more than the contribution limit would be if they had family insurance and would decide ultimately that the limit for each HSA is $4,225 (with the extra $1,000 for being over 55). Unfortunately though, the IRS has not specifically addressed this issue so it requires a little interpretation and it wouldn’t be a bad idea to consult a tax advisor.

      Nicole

      Disclaimer: This is provided for informational purposes only. The information provided herein is not intended to be tax advice, and is not intended or written to be used, and cannot be used, by the recipient to avoid any federal tax penalty that may be imposed, or to promote, market or recommend any referenced entity, investment plan or arrangement. While every attempt has been made to provide accurate and current information, Tango Health cannot guarantee that this information is correct. Please seek competent tax counsel to determine the applicability of this information to your particular situation.

  4. Can I have a family coverage ( for me and my 3 kids) even if my husband has his health insurance through work and we file tax jointly and have kids as our dependents?

    • Hi Mylene,

      Just to clarify, I think you are asking if you can have the Family IRS Contribution limit for your HSA.

      Also, it sounds like your husband has insurance through his work that is not a High Deductible Health Plan and you file taxes jointly.

      If you have a High Deductible Health Plan (HDHP) that covers you and anyone else AND you aren’t covered by any other non-HDHP insurance, then yes, you would have the IRS Family Contribution limit.

      Let me know if I misunderstood your question.

      Regards,
      Owen

  5. This was article was really helpful. My husband just started a new job and we’re trying to figure out what’s best.

    Before the new job, we were both covered by a HDHP plan through my job. Now with his job change, in our case, both of our employers offer a HDHP and offer what sounds like somewhat generous annual contributions to an HSA. Mine offers $750 a year (regardless of self or family coverage) and his offers $1,000 for families.

    Because we’re both young with usually minor expenses, we don’t make significant contributions to the HSA. My employer allows “one time” contributions which I will use when I’ve earned overtime/bonuses, etc., but my husband’s does not, and any changes in deductions takes a month to process. We were thinking sharing an account may be a better option for us, with my husband covering himself and our children, and me doing self-only, but based on your article perhaps not?

    Thanks for any insight!

    • Hi Dawn,

      I would strongly suggest opening two accounts if the employer contribution is a before tax contribution (see the article here for the difference between pre-tax and post-tax contributions: http://www.tangohealth.com/posts/consumer-directed-health-plans/who-is-eligible-to-make-pre-tax-and-post-tax-hsa-contributions/). Your employers cannot make pre-tax contributions to someone that is not an employee and may choose not to make any contributions at all to someone that is not an employee. If you are eligible for pre-tax contributions, at best you would be missing some tax advantage and at worst you would miss out on the employer amount entirely. The reason for this is that you can’t actually share an account. The account has to be in a single person’s name

      There are other factors to consider of course. For example, are you going to be paying a monthly maintenance fee for the account. Even with that considered, it is still likely worthwhile to open the account. I hope that makes sense.

      Best Regards,
      Owen

  6. Hi
    My husband has family HDHP. I am considering single HDHP from my employer, due to the fact they contribute 1600.00. My question is how deductibles are handled. Will we have 4000.00 with family plan and 2000.00 with mine, giving us a 6000.00 total deductible?
    Thanks!
    Beth

    • Hi Beth,

      Deductibles structured differently for many plans. The best thing you could do is talk with your insurer and ask how the deductible will work. With most situations, if you are covered under more than one health insurance plan, you will present the insurance card of the plan you want to use when you go the doctor. The cost of the care you receive will apply to that plan’s deductible. Once the deductible is met, the plan rules will kick in for that plan and these also vary widely.

      Since the structure or plans varies so widely it is worth talking to your HR team or to your insurer.

      Regards,
      Owen

  7. My wife and I are each covered by our own self-only HDHP’s which we purchase on the individual market so there is no opportunity for employer contributions or pre-tax contributions. We have no children. I am employed, my wife is not, and our taxes are married filing jointly. I currently have an HSA account but my wife does not.

    My question is can we each contribute to my account or will my wife have to open her own HSA account in order to make contributions?

    If my wife does have to open her own account, can she use funds from her account to pay for my medical expenses after my HSA is emptied? My wife is healthy however I have a chronic condition and my medical costs exceed the individual contribution limits every year.

    Thank-you for continuing to answer questions on this article.

    Daniel

    • Hi Daniel,

      To answer your first question, anyone can make contributions to any other person’s HSA. That means that your wife could make contributions to your HSA. This situation might not be ideal though. Since you both have self-only insurance, your HSA limit will be the self-only limit. If you both open an HSA, you would both have an account with a self only limit, allowing the two of you to contribute more overall. Also, since you are married you can use each other’s HSAs to pay for both of your medical expenses. So to answer your second question, yes, your wife could use her HSA to pay for your medical expenses after your account is depleted.

      Regards,
      Owen

  8. I married my wife in June 2013. She is on an indivual HSA plan through her work and I am on a family HSA. We have both been on HSA plans since 2011. I am a little confused on how the contribution limits would work in this scenerio. Is it advisable to remove her from her HDHP and add her to mine? If so, would there be penalties with her remaining HSA balance?

    • Hi Chris,

      In your situation you would share a contribution limit. That means any amounts you contribute to your own HSA or your spouse’s HSA would count against the family contribution limit for 2013.

      I can’t think of a reason to remove her from her insurance plan in order to add her onto yours. If I’m not thinking of something, please let me know. In regards to IRS penalties, you really only need to worry about this if you over contribute or spend money on ineligible expenses.

      In your situation I could foresee an over-contribution if you both contributed to your limits before the you were married. When you weren’t married you would have had separate limits allowing you to contribute more as a couple. But once you are married these limits are combined reducing your limit as a married couple. You would only face this problem if you had already made large contributions to your HSA. Do you currently find yourself in this situation?

      You may already realize this but I’ll say it anyways. To know if you will face a penalty, first calculate your new combined limit and then figure out how much each of you have contributed to HSAs so far this year.

      Regards,
      Owen

  9. I just started a new job that offers HDHP. The family group is insured through my husband’s HDHP. My questions are:
    -Can I get insurance (HDHP) for me as individual in the company I work for and still be covered with my husband’s HDHP?
    -My husband’s HDHP already reached the deductible, so now all of our healthcare expenses are covered by his policy. If I need to incur in a healthcare expense, may I choose which insurance I want to use? I’m asking this because I wouldn’t use my new insurance. I would only get an keep the contributions from my employer.

    Thanks!

    • Hi Elsa,

      The answer we provide are general answers that will require you to reach out to your insurance agency. This blog is primarily meant to cover issues regarding health savings accounts and both of your questions fall outside of that. Generally speaking though:

      1. Generally speaking, yes, you can be covered under multiple plans.
      2. The structure of payment is often determined by the policy. You should inquire with your insurer regarding how further expenses are covered.

      Best of luck with your research.

      Regards,
      Owen

  10. My husband and I are employed by a school district and he has carried our insurance coverage for 24 years…23 years family. In the past few years we have had an HDHP with an HSA. I am not allowed my own coverage or compensation for not having coverage since I’m covered under my husband’s plan. Now I’m becoming the primary insurance holder since my salary and the funding for the HDHP with HSA will come from Title I funding. My husband will receive no compensation for not having his own plan.

    Questions:
    1 – Who owns his HSA account? Him? Both of us?
    2 – Should the district open an HSA account for me now that I’m the primary holder?
    3 – Since there are other married couples in the same situation, should each hold an HSA account with 1/2 of the funds going into each account or doesn’t it matter?

    Thanks

    • Hi Lori,

      1. HSA accounts are held individually. This means if you already have an account, it is going to be in the name of either you or your husband, depending on who opened the account. With that said, both of you can open separate accounts if you wish so long as you are both eligible.

      2. Most likely you will want to open your own account. There are a few factors that could affect this decision and you may want to discuss this with your HR team. Most importantly though, if you plan on doing a payroll deduction, you will likely want to open your own account. The best contributions to the HSA are pre-tax contributions, either from your employer or from payroll deductions. You cannot contribute a pre-tax payroll deduction to someone else’s account.

      3. Married couples can choose to split their contributions between their accounts in any way they wish. The only exception to this would be if the contribution is a ‘catch-up’ for being over 55. These contributions must go into the account of the person that is over 55.

      Let me know if that doesn’t fully answer your questions.

      Regards,
      Owen

  11. Owen, thanks for sharing such an interesting article. I have a few unique questions. My wife and I just got married and are planning on going on my HDHP at work together in 2013. We plan on using the last-month rule to contribute the HSA maximum of $6,450 in 2013. We are planning on going on our own self-only HDHP coverage in 2014 and each contributing the self-only HSA maximum in 2014. Will we still meet the requirements for the “testing period” in 2014 (even though we went from family coverage to self-only coverage for both of us)? Will we be okay to contribute the full $6,450 in 2013 (even though we will both be on self-only HDHP in 2014)? Will I be able to contribute the full $6,450 in 2013 to just my HSA only? I appreciate your clarification!

    • Hi Nick,

      To answer your questions, yes you will still meet the requirements of the testing period even though you would have a different level of HDHP coverage. Also, yes, spouses can choose to allocate the fund whichever way they wish so you could contribute the entire $6,450 to just your HSA.

      Regards,
      Owen

  12. Thanks Owen! Is there any specific guidance that specifies that each spouse with self-only HDHP has to contribute the self-only HSA maximum in separate accounts? We would like to contribute the full amount ($6550 or $6600) to my HSA, but I believe we must contribute to our own separate HSA’s ($3300 each). Correct?

    • You are correct. When you are on self-only insurance, contributions would have to go into your own HSA. The reason for this is that your limit is calculated separately on your tax return and it would appear that you would be over your limit if you contributed more than the self-only limit to your HSA.

      Owen

  13. In my family’s case, my wife and I have the same employer. We are on a single HDHP policy (with family coverage) which happens to be in the husband’s name. Can the employer contribute 1/2 the family limit to each of our accounts?

    Bill

    • Hi Bill,

      In short, yes, the employer can contribute to both of your accounts assuming neither of you have disqualifying circumstances. Also, yes, the employer can contribute half the family limit to your accounts.

      Regards,
      Owen

  14. Hi Owen,

    I have a question about a recent marriage. My wife and I recently got married. I have an HSA through my employer. She is joining my health insurance coverage (now husband and wife from single) and I would like her to be able to access my HSA to pay for her covered expenses. Is that allowed, or does she have to have her own HSA account and she can only access that?

    • Hi Drew,

      Your wife would be able to use the funds in your account for her qualified medical expenses. She could also have her own account if that’s preferable. The logistics are pretty simple. Most banks will actually issue an additional debit card to spouses for accessing the account. I suggest you reach out to your bank about getting an additional card.

      Regards,
      Owen

  15. Hi Owen,

    My fiance and I both maintain separate HSA individual accounts. Once married, she plans on dropping her individual account and I plan on changing my coverage to family (so that she is covered). Say that she only plans to contribute $500 for this year under her individual account. Once we get married, say in October 2013, would I then be able to contribute to the family maximum less $500? If so, can this be done without using the last-month rule?

    Thanks in advance, your comments have been very informative.

    Paul

    • Hi Paul,

      It seems like you understand how it works and your description is accurate.

      Once you make the switch so that you are both on the same, family insurance plan you would count any previous contributions to either of your HSAs towards your family limit. It sounds like you wouldn’t have to worry about the last month rule because you were both eligible all year. Also, you would get the family limit according to the rule under 4(b) here:

      http://www.irs.gov/instructions/i8889/ch02.html#d0e398

      Regards,
      Owen

  16. I have recently retired from teaching with 30 years in the system. I am currently on my husband’s family coverage with a copay (not an HSA). The insurance provided by the retirement system is expected to get very costly in the next 8 years. Are there guidelines in place for covering or not covering spouses that are retired but opt out of their retirement plan’s insurance or does it usually only apply to working spouses that have not yet retired?

    Susan

    • Hi Susan,

      If I understand your question, it seems like you are trying to determine whether or not to stay on your retirement system’s insurance or switch to your spouse’s insurance.

      We can only really address issues that affect your HSA. If you are interested in factors affecting an HSA we’ll need to know a little more information. Primarily we would need to know if you currently have an HSA and if the retirement system offers a plan that is HSA compatible?

      If you are just trying to compare cost of premiums and services, we can’t help you much there and would suggest that your husband reach out to his benefits contact with his current insurance.

      Regards,
      Owen

  17. I am currently on my husbands insurance (which is not an HSA at this point in time). If his place of employment decided to go with an HSA, would I still be allowed to stay on his insurance or would I be forced to take the insurance through my retirement program?

    • Hi Susan,

      I suspect there is some confusion here. Whether or not you are eligible to be covered on your husband’s insurance is independent of whether or not the plan has an HSA. If you are worried that the plan won’t cover you in the future I suggest talk to your husband’s employer.

      Regards,
      Owen

  18. I am covered under a self-employed high deductible plan and have an HSA. I am getting married in January 2014. My soon to be spouse is covered under her own plan at work (unsure if it is HSA qualifying) and utilizes her FSA through her employer. My questions are:

    If my spouse uses her FSA, does that prevent me from continuing to contribute to my HSA even though I will not be on her policy? If yes, can she not constribute to her FSA and I contribute to my HSA?

    If her plan can qualify for an HSA (she has a $1250 deductible), can she open an HSA instead of using her employers FSA? Or is she automatically disqualified because her employer offers FSA (not a limited or post deductible)?

    Thank you so much.

    • Hi,

      I’ll do my best to answer your question but I’m going to make a few assumptions. First, I assume that when you get married you will change your insurance from what you currently have. In that case, if your spouse’s plan qualifies for an HSA, yes she can open an HSA so long as she does not have an FSA. It doesn’t matter whether or not the employer offers the FSA, only if she has an FSA. Also, it isn’t sufficient to simply not have any money in the FSA. She has to not be enrolled, in an FSA in order to be eligible for the HSA.

      Her enrollment in an FSA also affects you once you are married. If she has an FSA, she can use those dollars for your medical expenses once you are married. This basically means it is the same as if you had the FSA. For that reason, the IRS doesn’t allow contributions to an HSA if spouse has an FSA.

      Regards,
      Owen

  19. Thanks for the reply. I will not be moving my insurance from my current status and she will remain on her current plan. It seems from your answer that I have to make sure she is not enrolled in her company’s FSA plan if I want to continue to contribute to my HSA. Is that correct?

    Because I am self employed, I have been treating my HSA as a retirement vehicle, maxing out that, and paying medical expenses out of pocket to maximize the tax deduction and tax free growth, knowing full well I’ll be using that account in retirement for medical expenses. Due to the current age difference (I will hit 55 before her) and the use it or lose it FSA, it’s in our future best interest to maximize the HSA and look to possibly move her to a high deductible plan some time down the road.

    Again, thank you.

    • That is correct, you’ll need to make sure she isn’t enrolled in the FSA when you are married if you want to contribute to the HSA.

      On a side note, you should make sure you keep track of the expenses you are having even though you aren’t using your HSA now for those expenses. You can reimburse yourself at any time in the future for eligible medical expenses you incur. One of our software selling points is that we make future reimbursements really easy but the gist of it all is that you definitely should track them even if you don’t use your HSA money right now to pay for them.

      Owen

  20. Thanks again. Yes, that is what I’ve been doing, keeping track of medical expenses since the inception of my HSA back in 2005. It’s a great vehicle and really want to continue to take advantage of it. Your article, and subsequent answers to my questions, has been extremely helpful.. Thank you very much for that.

  21. Hello, I have an HDHP with an HSA through my employer, who contributes a certain amount of money per year into the HSA for each individual employee. I just got married and added my spouse to my HDHP plan. After I added my husband, my employer then doubled his annual contribution into my HSA since we are now considered a family, and I just got the first quarterly payment.

    I asked at my bank today and they said it is not possible to have a joint HSA account. Can I deposit the entire check from my employer into my HSA and then use it to pay all qualified medical expenses for both myself and my spouse? Or do I need to have my husband open an HSA and then request a separate check from my employer written out to my spouse? I would prefer to use one HSA for both of us, but wanted to make sure that we can do it that way. We do not plan to contribute an additional amount beyond what my employer contributes, so I don’t think we need to worry about reaching the maximum. Thanks!

    • Hi, your bank was correct in that there is no such thing as a joint Health Savings Account. However, you can still use any money that you contribute to your HSA on your spouse, regardless of whether or not they are covered under your plan coverage or not. So to answer your question bluntly – yes you can deposit the entire check from your employer into your HSA and then use it on both you and your husband’s qualified medical expenses. You should even be able to order an additional debit card for your husband as well so that he can use it whenever he needs to. Some banks may charge a fee for this. I hope that answers your question. Please refer to this IRS Publication 502 for a list of eligible medical expenses for HSA’s: http://www.irs.gov/pub/irs-pdf/p502.pdf

  22. Great article! Thank you for posting and answering questions! My spouse and I are both under 55 and both of our companies offer HSA’s. Both of us currently have regular health plans, mine is family (covers children)and hers is self-only, but we are considering the HSA/high-deductible plans for open enrollement. Is there any benefit/detriment to me selecting the high-deductible plan and making the family contribution while my wife keeps her traditional health plan, or is it better for us both to use high-deductible plans? Also, my spouses company also offers a limited purpose FSA (mine doesn’t). Would it make sense for me to make the full family contribution to my HSA while she makes a contribution to the limited purpose FSA? That way we can split out the vision & dental costs from the medical ones and hopefully keep more money in the HSA for long term health savings? Thanks in advance!

    • Thank you for taking time to read our blog! These are really great questions, and definitely something to consider in your upcoming health coverage decision. To make it a bit easier to comprehend, I’ll break your question into 2 sections and answer each part individually.

      Benefit/detriment to both you and your wife selecting an HDHP w/ HSA:
      Though there may be benefits in the quality of the HDHPs available to each of you, the only real HSA benefits would be realized if you were both able to have individual coverage, which would result in a slightly higher combined contribution limit ($6,600) than the shared family limit you would have if one or both of you enrolled in family coverage ($6,550). Since you’re both under 55, you don’t have the benefit of each contributing an additional $1000 to your HSAs, which is where each of you having an account would be necessary. So in your particular situation, it seems that having dependents and being under 55 would negate any additional benefit to both of you having HDHP coverage rather than just you.

      Benefit/detriment to your selecting the high-deductible health plan (HDHP) with family coverage and HSA, and your wife remaining on her traditional plan with individual coverage and limited FSA:
      Outside of the actual coverage your plans provide, this scenario would definitely provide the most overall benefit, because you have the ability to take full advantage of both the HSA and the limited FSA by each of you maxing out your contributions, thus maximizing your combined tax savings and benefits. Also, funds in both accounts can be used for the entire family (you and your wife, plus your dependents), with the HSA being used for long-term savings and medical costs and the limited FSA for vision and dental expenses. Either way, you achieve the maximum benefit of both accounts.

      I hope this helps you in your decision!

  23. hi,
    we have a scenario similar to all others, but a little different. married – file separately because of school loans – and have one child. our hdhp and hsa are through my employer. can i use my hsa $ for my husband’s medical expenses even though we file seperately? i have been claiming our dependent, so i think that works ok.
    thanks,
    e

    • Thank you for your question and for taking time to read our blog! Funds in your HSA can be used to cover the expenses of your spouse or any tax dependents, regardless of how you file your taxes or whether or not they are covered by your HDHP. It sounds like the entire family is covered by your HDHP, so it looks like you’re in the clear.

  24. Thanks for info. My company will start offering HDHP / HSA next year and I plan to switch to it. My wife will be covered under my plan and she does not work nor have any other insurance. She is over 55 and I am not. Can she open her own HSA just for the $1000 catch-up contribution? We could split my contribution but seems I’m better off having as much as possible directly deducted from my paycheck.

    • Hi Chris,

      Your comment is exactly right. She will need to open her own account in order to contribute the $1,000 ‘catch-up.’ Also, it is generally speaking it is better to do a payroll deduction if you can contribute pre-tax dollars so you probably want to do that for the rest of the contributions.

      Regards,
      Owen

  25. Hi. I am under my own single HDHP insurance plan through my workplace. My wife is covered separately through her workplace on a HDHP with coverage for herself and our son. Her insurance does not cover me but only covers her and my son. Since we have completely separate coverages with no overlap do we still have to share the $6450 family contribution max? It seems this does not make sense that we should be limited to this since my deductible is $3000 and her’s (with my son) is $6000. There is no overlap so in total we are at risk for $9000 yearly as a family. Being limited to $6450 does not cover all of our deductible amounts which is I assume what the amounts are based off of?

    • Thanks for reading our blog! First, it’s important to note that the IRS set a wide threshold for allowable minimum and maximum deductions, as well as minimum and maximum out of pockets. However, since there is so much variation, we suspect they set the IRS contribution limits somewhere in the middle with the expectation that not everyone is going to hit their deductible and out of pocket maximum every year.

      Besides that point, it appears that since you have Self-Only HDHP coverage that only covers yourself, you can only contribute up to the Self-Only maximum into your HSA. You can use your funds on anyone in your tax family, including your wife and son. Your wife appears to have Family HDHP coverage that covers herself and your son, and in normal cases would be able to contribute to the Family HDHP maximum…except the IRS has a spousal stipulation that you cannot exceed the Family contribution limit combined. While your health insurance coverage does not overlap, usage of the funds do and that’s where the limitation comes into play.

        • As far as the HSA benefit goes, there’s no benefit either way. However, remember that you both have to fill out your own Form 8889 for your respective accounts. Then, if filing jointly, you sum a few of the fields and list them on your joint tax return.

    • We don’t know for certain, but many guess it’s based on the Treasury’s estimate of inflation. Another theory is that they raised the maximum out of pocket by $100 for self-only and $200 for family; so the equivalent contribution limits were $50 for self-only and $100 for family. Only the IRS knows for certain. Thanks for participating in our blog!

      • Actually they raised the single $150 and the family only $200. This creates the imbalance. If we have family HDHP plan can we only use the family limit as opposed to twice the single limit?

          • Hi Craig,

            Unfortunately any reason I give would be speculation because the IRS doesn’t (to my knowledge) publish the explicit reasons why they choose a certain increase as opposed to a different increase. What we do know is that the IRS uses inflation to guide the increases.

            As you can imagine, almost any amount they choose could be argued against. It would be easy to make the argument that the family limit should be much higher than twice the single limit because family insurance often covers more than just 2 people. Additionally, it could be argued that the family limit should be much higher than what it is because the maximum allowed deductible for family is much higher. Others might argue that the limit should be much lower because deductibles on family plans are rarely above $6,000 (although I admit it’s not uncommon to see deductibles that high). Some might argue the limit should be lower because it is a tax give-away.

            With all that said, the IRS has to make a decision that balances the incentive to use HSAs with revenue considerations and as far as I know, they publish why they choose specific amounts. This means I probably can’t give you a satisfactory answer.

            Regards,
            Owen

  26. I cover my husband and child thru my employer insurance. Currently not a HD plan. However, for enrollment for next year the only option is the HD plan. My husband’s enrollment period runs mid-year, so we can’t make any changes to his. And, we do maintain a fsa thru his employer. During enrollment review, it appears I am not allowed to participate in an HSA because of his fsa? If it helps, we have already depleted the funds in the fsa.

    • Hi Terri,

      Unfortunately, you are correct. If you are covered by a full medical FSA, you can’t contribute to an HSA. You can still participate in the High Deductible plan but you wouldn’t be able to contribute to the HSA until the FSA plan year ended, even though you’ve already depleted the funds.

      Regards,
      Owen

  27. Great post and answering questions! It is well needed with all the new rules. In my case we already have HDHP plan with HSA through my employer in a family plan and my wife has had additional coverage with her employer for free for this year. She’s been covered by both plans with hers being the primary but not an HDHP. Next year she won’t have the free coverage but she has an option for the HSA plan and account. We are thinking of adding her HDHP coverage at work with the HSA account as she gets a one-time contribution from her company.
    Can she be covered in my plan as a family plan and her plan as employee only and have also her HSA account? Her company will give her $1250 so I imagine we have to reduce our contribution in my plan by that amount. Thanks

    • Hi Hector,

      To answer your question, yes, she can be covered by both plans, assuming your plan is also an HSA eligible HDHP. If that’s the case, the strategy you describe is definitely good. Also, you are correct that any contribution to her HSA would also affect your combined family contribution limit.

      Regards,
      Owen

      • Thanks for the response. One more question. Any idea why her employer asks if she`s covered by another Healthsaver account and if she is doesn`t allow to set up the new account? Is there a legal reason behind something like that.

        • Hi Hector,

          Without seeing the language her employer is providing I’m afraid there might be a misunderstanding here. It seems unusual for the employer to refer to the HSA as a Healthsaver account. It’s usually referred to as a Health Savings Account. Also, while expenses in an HSA can be used for dependents or spouses, it’s a little unusual to refer to that as “coverage.” That term is more frequently used with insurance plans and it makes me wonder if they are telling your spouse that she can’t have an HSA if she is covered by a non-eligible insurance plan.

          Taking that into consideration, if her employer is telling her she can’t have their HSA if her spouse has one or she has one already, I don’t think this would be due to the law. I can’t rule out that their might be legal reasons for them stating this but I’m not familiar with those laws. I don’t know of a reason why she would be legally disallowed from participating in the employer’s plan. In fact, many married couples have individual HSAs. The IRS considers the account to be an individual account and it cannot be a joint account. Lastly, depending on how the plan is set-up, the employer is responsible to meet certain legal requirements about equal treatment of employees and this applies to HSA contributions.

          I know my answer is a little vague but I don’t think I can provide more details without seeing the specifics you are referring to.

          Regards,
          Owen

  28. Hi Owen,

    My employer offers HSA eligible HDHP. They contribute $650 for individuals and $1300 for families. My wife’s employer does not offer HSA plans. Is it possible for me to take individual only HSA plan from my employer and my wife to take regular Family medical plan (including me). For all medical claims, can we use her insurance and will leave my insurance passively. Does this violate IRS rules?. I would like to do this if its allowed, because FSA plan looks like a great idea and i want to max out the contribution limit. Please suggest.

    • Hi Andy,

      Unfortunately, any insurance that covers you and is not an HSA eligible plan makes you ineligible to contribute to an HSA. This means if you are covered by your spouse’s non-HSA eligible plan, you (or anyone else, including your employer) couldn’t contribute to your HSA.

      In your last sentence you mention an FSA and I’m not sure if this is just a typo or not. If you are considering an FSA rather than an HSA, my previous statement would not be true.

      Regards,
      Owen

  29. my spouse covers our family under an HDHP and has an HSA. My company does not have an HDHP or HSA option. I also carry the family under a traditional insurance plan. Somebody said that dual coverage is not allowed if one person has and HDHP and HSA. Is that correct?

    • Hi Rita,

      Your statement is half right. You are allowed to have both a traditional plan and a high deductible health plan. There is no IRS or legal restriction on this. With that said, the IRS does prohibit contributions to your HSA if you are covered by a traditional plan. This means that your husband can be enrolled in the HDHP but cannot take contributions to the HSA.

      Regards,
      Owen

  30. My husband and I are employed by the same company. We currently are covered separately by HDHP with associate coverage only, and each have our own HSA. We file married separately. When we file, will there be issues with us having separate HSAs? Would it be better to file married jointly?

    • Hi Breanne,

      In regards to your HSA, there will not be any difference whether you file separately or jointly. You will share an HSA contribution limit because you are married regardless of how you file. I hope that answers your question.

      Regards,
      Owen

  31. Husband: 66 Wife:56
    Insurance: family HDHP through husbands employer
    individual HSA accounts for husband and wife
    can we both contribute $4250 to our HSA ($3250 + $1000 catch up)?

    • Hi Mary,

      Since you are married, you share the family contribution limit of $6,450. This means you can split that amount between your accounts however you’d like but together you can only contribute $6,450. If you use the self-only amounts you will contribute too much.

      With that said, since you are both over 55, you can also contribute the $1,000 catch-up to your accounts but this cannot be split however you like. The extra $1,000 must go into each account. In other words, you could contribution $7,450 to one accounts and $1,000 to another account but you can’t contribute $8,450 to one account. Also, you can’t contribute $8,500 combined because this would be over the family limit.

      Regards,
      Owen

  32. I have a S-Corp that has 2 employees, my wife and myself. In the past my company provided my wife with a Family HDHP Plan and contributed the max amount towards the HSA based on that years IRS limit. This year it looks like it will be cheaper for my company to provide me with a single coverage HDHP and my wife with Employee+Dependents HDHP plan. Since Employer HSA Contributions have to be the offered to all enrollees and not just 1, should I have the company fund $3225 for each plan and have me open a new HSA account for my plan or can I have the company fund all plans for $6450 but since we have met the family IRS limit only fund my wife’s account?

    • Hi Dave,

      I think I’ll need further details. Are both you and your wife “employee-owners” of the S-Corp?

      Regards,
      Owen

      • I am the only share holder and officer however when it comes to Health benefits the IRS considers the wife as an owner for tax purposes so it falls under the same situation as if she was an officer.

      • I am the only officer and shareholder of the Corp. However for Tax Filing purposes she does get categorized for Health Benefits as a 5% owner since she is my wife. Not sure if that IRS rule changed for 2014.

          • Hi Dave,

            I think your originally question was about how to do legal contributions to both you and your wife’s HSAs. Since you are both employee-owners, any amount from the company has to be post-tax which means it will be the same as receiving compensation. Because of this, the comparability rules and the rules from cafeteria plans for pre-tax contributions wouldn’t apply. Let me know if I misunderstood your question.

            Regards,

  33. I have a bit of the opposite situation as your example. For 2014, both my husband and I have PPO coverage from our respective employers (non-HDHP). In each case the cost to add our 4 year old daughter to the coverage, or change to family coverage, is more expensive than to get a child-only HDHP plan. I am getting conflicting messages about whether there can be an HSA opened in conjunction with the child-only coverage, and whose name it would be in. Can you clarify?

    I currently have an HDHP and HSA in my name that covers both me and my daughter, but my employer is eliminating that coverage option for 2014. I have enjoyed the ability to keep any unused HSA contributions and would like to continue to contribute.

    • Hi Rachel,

      Unfortunately you wouldn’t be able to open an HSA if your daughter was the only one with eligible insurance. Dependents are not allowed to have HSAs and the HSA has to be opened in the name of the eligible individual.

      Regards,
      Owen

  34. My wife and I both have HSA accounts with HDHP’s with separate employers. Say my HSA has enough to cover her deductible and my deductible. Can we use my HSA account to pay out her deductible and bills even though she might have some unused money in her HSA account?

    • Hi there,

      The IRS says that you can use your HSA funds for anyone in your tax family (i.e., your legally-married spouse and dependents) even if those people are not on a HDHP. So, yes you can use your HSA to pay for your spouse’s deductible and likewise she can use her funds toward your deductible. Find out who is garnering more interest or investment potential, or has lower fees, to determine which account you should spend out of first.

  35. Thanks for the info. I loved reading the responses to the posts and I’m hoping you can answer something that was not covered. Specifically I am married with 3 kids currently covered under my PPO plan. I want to change it so that I cover 2 my children with medical issues on the PPO plan provided by my employer and have my wife cover herself and the 3rd child through her employer HSA plan so that we can get make full $6450 family contribution. The reason for this is my wife and daughter are rarely sick, her HSA premiums would be low, and they have an employer matching contribution, so we hope we can build up the HSA savings. Would there be any issues with this, basically we are trying to lower our AGI, maximize employer contribution, and maximize HSA savings?

    Summary:
    1) Married with 3 Children
    2) PPO from my employer would cover myself + 2 children
    3) HSA from wife’s employer would cover wife + 1 child. She would get an employer matching contribution, which is $1000 for family in this case, $500 if it was single. We would contribute to the max which would be $6450.

    Thanks again.

    • Hi Ray,

      From the information provided, it looks like that would work fine. As long as her insurance (that covers herself at one child) is classified as a Family HDHP, then that allows her to contribute up to the Family maximum. This increases is $6,550 for 2014.

      The key is for your PPO and/or FSA selection to not cover her. The PPO should be “Employee plus Dependents” and if you select an FSA, only do a Limited Purpose FSA that only covers dental and vision. Since FSAs can be used on anyone in your tax family, your full Medical FSA would preclude her from contributing to her account.

  36. Simple question – My wife and I are thinking of going with separate insurance. Under my plan, I would choose coverage for just me using an HDHP using my employer (who makes no company contributions). My wife would go with an HDHP using her employer to cover herself and my daughter (they have an employee + 1 plan).

    Can we pay medical expenses incurred by any of us from either of the HSA accounts? For example, I have a doctor visit but not enough money in my HSA, so we use her HSA account to pay my expenses. Is that permitted under law?

    Thanks

    • Hi Thad,

      Yes, you can use the HSA for expenses incurred by you, your spouse or your dependents. The same is true for your wife’s HSA.

      Regards,
      Owen

  37. I have HDHP for me + 1 child, my wife has HDHP alone. We each have our own HSA. I understand we can contribute up to $6550 combined and split the contributions as we want between our 2 HSAs.
    Is there a better tax impact to have a larger contribution done by the spouse that earns the most? the least?
    thanks!
    Xla

    • Hi Xla,

      I don’t think I can answer that question definitively and you would probably be best consulting a tax adviser. If you don’t file taxes jointly, two considerations for determining the best way to divide the contributions might be:

      - ability to do pre-tax contributions
      - income tax brackets

      There is a fair amount of detail related to your unique situation that would affect this though.

      Best Regards,
      Owen

  38. My employer allows for a domestic partner to be on my HDHP plan. Starting Jan 1, 2014 I will add my boyfriend for family coverage, since he is in grad school. We plan on getting married by mid 2014 (should be noted that I am a female). As far as distributions/payments from the HSA for qualified medical expenses, would I be able to use them for him only after we are married or for the whole year?

    • Hi Lisa,

      You would only be able to use your HSA money for his expenses after you were married. He could always open his own HSA though and use that HSA for his expenses.

      Regards,
      Owen

  39. Owen, thanks for sharing the interesting article.
    This is very helpful. I do have some questions–

    1- we are family of 4 (2 kids) and both my husband and I work for same employer. I am confused if we both should opt for seperate HDHP with two seperate HSA’s and cover one kid each. Our employer contribute 700$ for individual +1. ?

    2 . If we do as above then won’t we be paying premium for each of HDHP plan and will have seperate deductible. For example my premium for HDHP + 1 kid will be 180$ per month and deductible of $3000. And same would apply for my husband as well and in return each of us will receive 700$ employer contribution. Is it correct?

    3. Is it possible that we enroll in one HDHP plan as family and open two seperate HSA accounts to get employer contribution ?

    Thanks in advance for your help.

    • Hi Guarav,

      The way employer contributions are handled would be up to your employer. Your employer may choose not to do the $700 contribution to both of your HSAs. You should ask HR how they would handle this. In regards to the deductible and premiums, you are correct. If you enroll in separate insurance you would have separate deductible and premiums.

      Regards,
      Owen

  40. Here’s my situation. Three years ago I opened up an HSA account for a high deductible family plan for my son, wife and myself. Two years ago my son dropped off and my wife and I went to two individual, high deductible plans. I continued to contribute the family maximum to our one HSA account. From an IRS perspective, is it okay to have one HSA account when both spouses have individual plans? My concern is that the IRS might interpret putting in the family maximum as over contributing since we only have one account. I am 57 and my wife is 55. Thanks in advance for your help. Bruce

    • Hi Bruce,

      Technically since you are both under self-only HDHPs you should not be allocating the money entirely to one account. You should be splitting the amounts between the two accounts.

      Regards,
      Owen

  41. Hi, I have a question. I am on a HDHP plan and I have added my single kid on that plan. My wife is also on her company HDHP plan and she insures only herself. She selected 1400$ for her HSA account. So I can select to put 5150$ on my HSA account right (6550-1400=5150). I understand for 2014 6550$ is the contribution limit for family.

    • Hi Heather,

      When you are married this is allowed. Before you are married his HSA money cannot be used for your expenses regardless of the insurance situation.

      Regards,
      Owen

  42. I am covered by my husband’s HDHP plan through his employer (family coverage.) I have money in an IRA that I would like to roll over into an HSA. Can I open my own HSA under his insurance policy?
    (we are both over 55 if that has any bearing)

    • Hi Katherine,

      Yes, because you are covered under an HDHP (even though it’s your husband’s plan) you can have an HSA so long as you don’t have any disqualifying coverage. Also, you might want to do this if you are maxing out your HSA contributions because you can only contribute the $1,000 catch-up to your account.

      Regards,
      Owen

  43. Our entire family is covered under my husbands insurance which is an HDA. He also has an HSA w/match from his company. My company gives me $2400 per year in an FSA account for opting out of insurance. Can I use this FSA account on Medical expenses?

    • Hi Sam,

      Unfortunately, if you have a full medical FSA, your husband may not contribute to his HSA. If you do have a full medical FSA, you can use that for any medical expenses incurred by you, your spouse or your dependents. You can’t have both because the IRS tries to limit the total tax deduction for medical accounts.

      Regards,
      Owen

  44. My wife and I are going to be on the same High deductible plan through MY work. My work has an HSA t hat gives us $500 and hers gives us $1200. Can we open two separate HSAs, one at my work and one at her work as long as we stay under the $6550 limit for 2014? The key to this question is that we are both going to be under my insurance policy.

    • Hi David,

      First, yes, you can both open HSAs underneath your insurance assuming your insurance is a high deductible health plan and you have no disqualifying insurance. There is nothing preventing you and your wife from each having an HSA. You are correct that your combined contribution should not be more than $6,550.

      Employers often choose not to provide employer contributions to employees who opt out of their insurance. This means, your wife’s employer may choose to not contribute to her account since she is not on their insurance. There is nothing in the law that prevents or requires the employer contributing to the account. It is at the employer’s discretion. She should speak with her HR team to make sure she can still receive the $1,200 even if she doesn’t enroll in their insurance.

      Regards,
      Owen

  45. What does full medical FSA mean? I do not get any insurance through my company. I do not contribute to an FSA, I only have an FSA account that my employer contributes the funds. I do not contribute.

    • Full medical FSA means an FSA that you can spend on medical expenses before you’ve met your deductible. The way you describe it sounds like this is what you would be taking.

      Regards,
      Owen

  46. I have had a high deductible insurance plan (and HSA) for my family through my work for the past three years. We are now switching to the HD plan through my husband’s employer but we plan to use our same HSA account. His employer is contributing $1000 to the HSA. Can I continue to contribute pre-tax dollars to the HSA through my work even though the insurance is through my husband’s employer?

    • Hi Lani,

      Whether or not you can do that is up to your company. Some companies don’t allow pre-tax contributions to HSAs when that person is not enrolled in the company’s HDHP. You’ll need to consult with your HR to determine if they will allow you. Also, you should consult with your husband’s HR team to determine if you will need to open an account for him to receive the $1,000 contribution from the employer. Most likely you will.

      Regards,
      Owen

    • Hi Ravi,

      Yes, you can choose Family HDHP (with an HSA) coverage for yourself and her, while she also chooses to cover herself with a regular PPO plan. You may want to consider the premium costs for going this way. While you would be able to contribute more to your HSA because of the Family plan, you will be paying to cover her on your plan while she is also covering herself on the PPO. Additionally, you can only contribute to an HSA when you are on a HDHP so your wife would not be able to open and contribute to an HSA – only you. She also should not opt for a medical FSA since that would make you ineligible to fund your HSA.

  47. My husband and I work for different companies. For the last 8 years my husband has been under my HMO plan at work. This past year my husband was offered the HSA account from his and he took advantage of it. He used the HSA for paying items such as glasses or co payments and never actually used the insurance itself. He was just told by his HR person that they made a huge mistake and that he is not allowed to carry an HSA insurance account while he is covered under my health insurance at my job. Is this correct? We are trying to find the answer but are unable to do so. His HR is telling us that not only does he have to drop the HSA account but that we also have to pay them back for all of the funds that were used during the year.

    • Hi Ella,

      It is correct that if your husband was covered by your insurance plan and your plan was not a high deductible plan, he should not have contributed to an HSA. If you contribute to an HSA when you are not eligible you can face tax penalties. In regards to returning the funds to his employer, where the funds payroll deductions or employer contributions?

      Regards,
      Owen

  48. I am on a HDHP with an HSA. My wife is on a PPO plan. We are married filing separately. Can I pay for my wife’s medical expenses with my HSA? Is she still eligible to contribute medical expense money to her FSA?

    • my wife’s employer also does a contribution to an HRA, I am allowed to contribute to my HSA if she gets and uses a contribution to an HRA from her employer? Or does it only limit HSA contributions if it’s from an FSA?

    • Hi Brett,

      If your wife is a full medical FSA (not an limited or dental & vision FSA) this makes you ineligible to contribute to your HSA. If you already have money in your HSA, then yes, you can use that money to pay for your wife’s medical expenses even though she is not on your insurance nor is she on an HDHP.

      Also, your HSA does not disqualify her from an FSA. Only her FSA disqualifies you from making contributions to an HSA.

      Regards,
      Owen

  49. Hi: Great blog! Too much about HSA plans is not well-defined.

    I’m self-employed, married filing jointly, two kids. My wife has a HMO-type plan from her work that does not cover the family. She also has dental insurance through her work that does cover all of us. I have an HDLP plan with an HSA that covers myself and the two kids.

    When we first bought the HDLP plan and opened the HSA, all four of us were on it and we opened it in my wife’s name at her bank. 4 years ago, she got a new job that offered the HMO-type plan at nearly no cost to her, but a very high family coverage premium. So I dropped her off the HDLP and continued to insure myself and the kids.

    We have not contributed to the HSA since, but now I realize I can’t because it’s in her name. Can I use accumulated medical cost receipts to draw down the existing HSA to zero, and then open a new HSA in my own name?

    Does the fact that she has other insurance disqualify me? She does not have an FSA. Is there an “expiration date” or other disqualifying factors for those medical expenses I paid but have not yet reimbursed myself via the HSA?

    • Hi Matt,

      There’s no expiration date on when you can reimburse yourself. Also, you don’t need to draw down and close her account before opening your own. In fact you can both have an account at the same time. Lastly, you are not disqualified due to her non-eligible insurance because it only covers her and only disqualifies her from making contributions.

      I hope that helps!

      Regards,
      Owen

  50. Hi Owen,

    I apologize beforehand if you had answered the following question, but I’ll be signing-up for a HDHP next year (2014; family plan to include me and my wife) and would like to fund/max-out the HSA.

    My wife (who does not work) and I are over 55. I would therefore be eligible for the $1000 catch-up contribution, but the question is, would my wife also be eligible for the $1000 as well, even though she is not currently employed?

    From what I have read this far, it appears that she would have to open up a separate HSA account (if indeed, this is acceptable or possible), and would only fund this HSA with the $1000.

    When you have a chance, would you please advise accordingly? Thanks!

    -David

    • Hi David,

      What you’ve indicated is correct if you plan on maxing out your contributions. Your wife is eligible for the $1,000 catch-up. Your HSA will have a $7,550 limit in 2014. Anything contributions above that would have to go into your wife’s HSA.

      Regards,
      Owen

  51. Presently, I have an individual health plan, and my wife & son are on a separate family policy. We were not able to get an affordable family policy for the three of us due to my having a pre-existing condition. For 2014, my wife has chosen to keep her plan and I am exploring new plans. We have an HSA that is already established and we have contributed to for a couple of years. I am looking at a 2014 plan which has a deductible of $1000. This combined with my wife/son’s deductible, will be over $2500. Will we still be able to use our HSA in 2014 and contribute the maximum, or does my plan make me ineligible since my individual deductible is $1000? I cannot seem to find anywhere where this issue is clarified.

    • Hi Harold,

      Eligibility for the HSA is determined by whether or not the insurance covering the person in question meets the deductible levels. In other words, if you want to know whether or not you are eligible for an HSA, only your deductible is taken into consideration. For 2014 on self only plan you need a minimum deductible of $1,250 and maximum deductible of $6,350. If you are on family plan in 2014 it is $2,500 and $12,700 respectively.

      If you’re wife’s plan qualifies as a high deductible plan, she can have an HSA and contribute the family max because she has coverage which applies to her and your son. She can also use any money contributed to her HSA to pay for your medical expenses even though you are not on her insurance.

      Regards,

  52. I funded my HSA with a direct rollover from my IRA. I had HDHP with my employer & had family coverage. I have exhausted the funds from that account and it is closed.
    This year my husband has an HDHP through his employer & I want to open my own account (managed by his company’s credit union.) Can I fund my new account with a distribution from my IRA.

    • Hi Katherine,

      Unfortunately, distributing funds from your IRA to your HSA is only allowed once during your lifetime. If you were planning on doing this because your account balance was not high enough to cover expenses, you should consider doing a reimbursement after you’ve funded your account enough. Tango’s software makes this very easy but any custodian should allow it.

      Regards,
      Owen

  53. I have an HDHP through my employment and have my entire family covered, including my husband. I recently set up an HSA and am contributing $6K annually to it. Could my husband also set up his own HSA and deposit the remaining family allowance (i.e., $600)? He is not happy with the interest rate on my HSA account, but my employer requires that I use this particular account. He would like to maximize our investment by setting up a separate account that would garner a higher interest rate.

    • Hi Susan,

      Yes, your husband can setup another HSA and contribute to it as along as he is eligible (he’s covered by your plan and now disqualifying coverage). There are a couple things to consider though:

      1. Your employer can’t force you to use their HSA plan. What they can do is force any pre-tax contributions to go into their HSA plan. That means if you take a payroll deduction, which is not taxed, and put it in the HSA, they can require that to go into the HSA plan they chose. If you don’t want to use that HSA you can simply take the money in your paycheck and not do a deduction. Once you have the money you can put it into the HSA of your choice. If you use this method, you will not save taxes when you put the money in the HSA but at the end of the year when you file your taxes you will be able to deduct the amount you put in from your income, saving income taxes.
      2. If you don’t do a pre-tax payroll deduction you will not avoid payroll taxes. If you want to avoid payroll taxes you need to do a deduction through your employer. This is a significant amount of money and can often out-weigh earning from interest. Most banks we are familiar with offer less than 1% in interest. Payroll taxes are about 7%.
      3. You can always roll money over from one HSA to another HSA. Once you’ve done payroll deduction and deposited money into your account, you could withdraw the funds and put it in another HSA with higher interest.
      4. You should look at invesment options. Most HSAs allow you to invest the funds which may meet your needs.
      5. You will need to take into account monthly maintenance fees. Many banks charge a monthly fee simply for having an account. An employer account often covers these fees.
      6. You could talk to your employer about switching HSA providers. Often the provider is chose by a broker or insurance company without your employer having much input.

      Best Regards,
      Owen

  54. Hi, I have had an HDHP/HSA for several years and my wife was covered on my plan. This month (February) she will be getting her own single insurance HDHP with an HSA. I also will be switching at the same time to a single HDHP and keeping my HSA. I understand that we can each put up to $3150 in our HSA for the year.
    Is that correct?
    Also, since I have been funding our HSA for years, I wondered if my HSA dollars can still cover any issues she might have, even though she will have her own HSA? Thanks, Mike

  55. Hello Owen, how are you?
    I’ve read thru the entire blog here as well as searched all over the Internet, with no avail, for the help with my scenario.
    I am self-employed, over 55, and was covered, together with my wife, by her HDHP family plan thru her employer 1 and then employer 2 from 1/1/2013 thru 11/30/2013. During that time, due to technicalities, she actually contributed, thru her payroll deductions, $6,396.12 in total.
    We both now have our own individual HSA accounts, which we didn’t make any contribuitions to since 11/30/2013. Still, my wife’s individual contribution limit has been exceeded ($6,450*11/12 + $3,250*1/12 = $6,183.33) by roughly $213, which basically became a pure tax related issue, which we’re handling.

    Now, about my individual situation… Is there any room at all left for my individual contribution for 2013, especially considering my $1K “catch-up”. Ideally, I’d like to maximize my deductions and contribute as much as I still can, if anything.

    Please help to figure out how much I can still contribute. Or can I?

    • Hi Alex,

      I agree with you that you over-contributed to your wife’s HSA for last year and it’s great that you are getting that fixed so that there are no IRS penalties later on down the road.

      To answer your question, it sounds like you did not contribute anything to your own personal HSA last year and if that is the case, you are still eligible to contribute your catch-up contribution of $1,000. Since you were eligible for an HSA in all of 2013, you are eligible for the full $1,000 contribution. You can send this in as long as you have not filed your taxes for 2013 yet. Just make sure this is being contributed to your own personal HSA and not your wife’s account!

      Please let me know if you have further questions.

      Paige

  56. Additionally to the above. Sorry, forgot to mention: both my wife (at her latest employer) and I (via COBRA) still were covered under our individual HDHP from 12/1/2013 thru 12/31/2013.

  57. If you have a married couple where the husband is making contributions to his individual HSA and the wife is making contributions to her family HSA, I’ve found that you can split the annual contributions either 50/50 or another agreed upon split. What kind of agreement is necessary to do that? And can you change the percentage split every year?

    • Hi,

      You are right in thinking that you can split the family contribution limit between the two of your accounts however you may choose. Here is an excerpt from the IRS Publication 969 regarding this topic:

      “If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. If each spouse has family coverage under a separate plan, the contribution limit for 2014 is $6,550. You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses’ Archer MSAs. After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division.”

      The main part that you want to take note of here is the last sentence where it says “the contribution limit is split equally between the spouses unless you agree on a different division.” This means that you are able to split the family limit between you and your spouse however you like and you are not subject to your own self-only limits on the account. There does not have to be any formal agreement, but it is important that you and your wife keep track of your contributions so as to not over-contribute on accident. You can change your percentage split each year and it does not have to be the same every year going forward.

      Let me know if you have further questions.

      Paige

  58. My wife and I are both employed and are offered health insurance through our respective companies. My wife is considered a single on her health insurance and has her own HSA with a contribution from her company of $500. My wife is a secondary on my insurance which also has an HSA with a contribution from my company of $1200. I then elect to contribute an additional $600 per year. We are both under 25 so most of this is new to us. Since she is a secondary on my health insurance she would have access to my HSA but I would not have access to hers for instance. Should I be a secondary on her health insurance so her company would see her as a family and provide $1000 contribution? Is this possible to do? My wife pays monthly for her insurance and I do not pay anything so it makes sense for her to accept her insurance because she pays less than $100 a month I would otherwise be charged because she would be turning down health insurance from her company.

    As far as our contribution limits for the year it is capped at the family rate of 6550? (I believe the new rate for 2014) and that is spread out through both HSA’s?

    • Hi,

      To answer your question towards the bottom, you are correct that your annual contribution limit together as a couple is $6,550 and you cannot exceed that maximum in 2014. You are able to split it between the two of your accounts however you please, as long as it does not exceed the max. There are no individual limits that you have to adhere to.

      I want to note that even though you are not covered under her plan, you still do have access to the funds in your wife’s HSA. The IRS Publication 969 states that you are always allowed to use your HSA funds on your spouse regardless of whether or not they are covered under your plan. Even if your wife had a PPO (not HDHP) and was not eligible for an HSA personally, you could still use your funds on her expenses. So I want to be sure that it is clear that you are allowed access to her funds even though you are not on her plan.

      Whether or not you are a secondary on her insurance or not is up to you. I realize that you would receive an extra contribution from her employer if that were the case, but sometimes there is also an increase in the monthly premiums to add more people to the plan. You would have to see what all is involved with getting on her plan to consider if it is worth it or not.

      To answer the question on your follow-up comment, I can’t necessarily tell you how much is best to contribute for your family, but I can give some general guidance that will hopefully help in making your decision. As I’m sure you already know, everything that you contribute to an HSA rolls over from year to year so you never have to worry about losing the funds, even if you leave your current job or switch to an ineligible plan. The more you contribute to the HSA, the more you save in taxes and the lesser your taxable income is at the end of the year. In my opinion, it doesn’t hurt to contribute more than you think you may use during the year, knowing that the money will continue to roll over every year. At least then you would know that you have a safety net if something unexpected happens down the road and you end up incurring some medical bills. However, you also have the option to reimburse yourself for any eligible expense that was incurred while the account was open, which is why some people choose to contribute less up front and then begin to contribute more later if they end up needing to.

      I hope that makes sense and answered your question instead of confusing you further! Let me know if you have other questions.

      Paige

  59. I’ve read your blog and most of the comments, but have yet to find an answer for my unique situation.

    My wife and I are employed at the same company. Previously, we each had separate Employee Only HSA plans that we contributed the max to.

    Since having children, my wife has been on a Family HSA plan, contributing $0 HSA funds. I am still on an Employee Only plan, contributing the family maximum. This is allowed because we are considered one family unit that shares the HSA funds.

    As a result, we have a total of 3 HSA accounts: Me account, Wife account, Family account (funded entirely by me).

    We do not use HSA funds to pay qualified expenses. Instead, we let these tax-sheltered funds grow for us to use 10-30 years in the future.

    Now that we have built up a sizeable amount of money between these three accounts, we intend to invest the money in mutual funds, an option provided by the bank holding the HSA accounts.

    Here is my questions:
    To avoid fees and make it easier to manage these assets, I would like to combine the three separate accounts into one. Am I allowed to do this?

    My gut says yes, since married couples are allowed to spend HSA funds on each other or their dependents. Please let me know if this is possible?

    Thanks

    • Hi Matthew,

      Unfortunately, there is no way to combine all of your HSA’s into one account as there is technically no such thing as a “joint-HSA” for married couples. Each HSA is in one person’s name, and while you can use your funds on your spouse, you cannot combine your two accounts into one.

      I know that is not what you wanted to hear, but please let me know if you have further questions.

      Paige

      • Thank you for the quick response. Let me provide some additional info I should have included initially…

        - The individual His and Hers HSA’s are old accounts from our previous healthcare provider, and not being contributed to.
        - The Family HSA is the only active account that receives new funds. However, this account does not include an investment option.
        - Therefore, I plan to open a new account with a separate bank/credit union that allows for investing.

        I would transfer funds from the old His and Hers HSA’s to this new account (closing the old accounts). Once or twice a year, I would transfer funds from the active Family HSA to this new account so they can also be invested.

        At a minimum, I should be able to open the new HSA and transfer funds from both His HSA and the Family HSA, since these were funded from my income and are in my name.

        Am I allowed to do this?

        If so, the only account I’m unsure if I can consolidate is the individual Hers account. Since we’re married and can share HSA funds between us, I was hoping we could just roll these funds into this newly created account.

        If I can’t combine the old Hers HSA with this new account, I may just liquidate & close this old account, so I don’t have the hassle of so many accounts.

        Does this sound like my best option?

        • Matthew,

          I am somewhat confused by your use of “Family HSA” because an HSA can only be in one person’s name – as I mentioned before, there is no such thing as a joint-HSA. You can designate a beneficiary on the account, but there is still only one person’s name on the account. Depending on whose name the “Family HSA” is in, you may or may not be able to roll it into the account in your name. I believe you did mention that the Family account was in your name, so if that is the case then you will be able to roll it over into the new HSA that you plan to establish (as long as it is in your name as well).

          The main rule here is that you can only rollover accounts that are in the same name, so if the Family HSA, the new HSA and one of the old HSAs is in your name then you should be able to combine all of those into one. The one that you will not be able to rollover is the account that is in your wife’s name. There is no way around that unfortunately and that account will have to remain separate from the others. I would recommend spending the funds down in your wife’s HSA until you deplete the funds and then you will only have one or two accounts to manage at one time. Remember that if you remove the funds from an HSA for any reason other than to pay for an eligible medical expense, you will be penalized and also have to pay taxes on the funds.

          I hope that explains it more thoroughly. Let me know if you have further questions.

          Paige

  60. Thanks for the clarification…

    It sounds like I can combine my Individual account and “Family” account (which are both in my name and SSN) with the new investment account, which will also be in my name.

    My confusion/frustration comes from how the IRS defines & structures the HSA when two spouses have separate plans…
    I am on an Individual plan and my wife is on a Family plan, so we are limited to the family max for contributions.

    To avoid the hassle of having two separate accounts, all HSA contributions come out of my paycheck and go into a single account. This is considered “my” account according to the IRS, even though I have an individual plan, yet contribute the family max of $6500/yr.

    But in reality, “my” account is for the entire family, with the funds to be used by everyone in the household.

    • Matthew,

      You are correct that you can only contribute up to the family contribution limit between the both of you. If you are the only one making contributions for your family then your limit is $6,550 (even though you are on a self-only coverage plan). Here is what the IRS Publication 969 has to say about this:

      “If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. If each spouse has family coverage under a separate plan, the contribution limit for 2014 is $6,550. You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses’ Archer MSAs. After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division.”

      The last sentence explains your confusion when it says “the contribution limit is split equally between the spouses unless you agree on a different division.” This means you have the ability to fully contribute the family limit to your account, as long as you do not over-contribute the $6,550 as a family unit.

      Paige

      • Thanks again for your insight and quick responses. This blog is the only resource I’ve found that has been able help me thoroughly understand these issues.

  61. Paige,

    It seems you may have covered this in the above scenario, but it is slightly different.

    In 2013 I had a single HDHP plan with an HSA through my employer and my wife (file jointly) had her and our child on a separate HDHP plan with an HSA through her employer. I didn’t realize my employer contributions counted towards my maximum and ended up over-contributing to my HSA for 2013 for a total of $4,100. My wife contributed only $2000 to her HSA.

    Even though I contributed more than the limit to my individual HSA, since we file jointly am I ok since together our accounts did not go over the combined limit for the year?

    If not, can I change the excess amount I contributed in 2013 to a 2014 contribution?

    Thanks!

    • Hi Nick,

      It is okay that you contributed $4,100 to your HSA since your wife only contributed $2,000 to hers because if you add those together, it is still less than the family contribution limit of $6,450. You probably saw this quote from the IRS Publication 969 which applies to this situation:

      “If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. If each spouse has family coverage under a separate plan, the contribution limit for 2013 is $6,450. You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses’ Archer MSAs. After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division.”

      You should pay attention to that last sentence that allows you to split the difference of the family limit between the two of your accounts however you would like, meaning you are not held to the self-only coverage limit of $3,250.

      Also, for your information, had you actually over-contributed and been in a bind, you probably could have just reclassified the funds to count towards the 2014 contribution limit. Most banks will allow that!

      I hope that helps!

      Paige

  62. Hi! I am working on my taxes right now and have a question about my HSA. My husband and I both work for the same company and both get $$ contributed to our HSA. We each have our own account. In Turbotax, it is wanting to fill in Box W on my W2 with both the amount that is entered for me and then also my husband on the next line. Basically, this doubles the amount, showing that I have an excess. Is there anything I can do?

    • Hi Sarah,

      I am very sorry but I do not think that I can answer this question since I cannot see your Turbotax screen. I would highly recommend contacting the Turbotax support center for that question so that they can walk you through their system.

      I can tell you that if either you or your spouse are covered under a family coverage plan (meaning you are not each on your own self-only coverage plans) that your limit together for 2013 was $6,450 and you can split it between the both of your accounts however you choose. However, if you are each on your own individual plans then you are each limited to your personal contribution limit of $3,250.

      I hope that helps and I am sorry that I could not be of more assistance.

      Paige

  63. Hello, I have question regarding HSA’s. My wife and I work at the same company. We decided to have the premiums taken out of her paycheck. It was cheaper premium wise to do that. it’s employee +spouse high deductible plan. She puts money in pretax to the HSA in her name. I am under the presumption I can NOT contribute to that HSA though I am on the account. The statement comes in her name.
    Thanks,
    Kelly

    • Hi Kelly,

      If the account is in her name then she will be the only one who can contribute pre-tax through payroll to that HSA. You can contribute post-tax to the account but you are correct that you are not eligible to do it through payroll.

      If you have further questions, please let me know!

      Paige

  64. Hello,
    I have a fairly simple question, I think. My wife had a cobra HDHP family plan until Sept.1. She had an HSA, I did not. Sept. 1 we got individual HDHP plans and I opened an HSA. She can prorate at the family rate for 8 months, prorate at the individual rate for 4 months, for her contribution limits,correct? I can prorate as individual for 4 months? We are both over 55.
    Thanks,
    Ross

    • Hi Ross,

      If you were included under her family HDHP through COBRA, then you were eligible for an HSA during that time as well. As long as you are covered by any HDHP, regardless of whether or not the plan is in your name, you are eligible for an HSA.

      So, if you were both covered under a family HDHP from January – August, your pro-rated family contribution limit was $5,633.33 (which includes each of your catch-up contributions of $1,000 for being 55+). I got that total by doing the following: I divided $8,450 by 12 and then multiplied it by 8 for the number of months you were on the family plan.

      *A married couple may make two HSA catch-up contributions, so long as both spouses are at least age 55, but in order for a married couple to make two HSA catch-up contributions, a separate HSA must be established in the name of each spouse.

      Now, since you both switched to self-only coverage HDHP’s starting in September through December, you would have a pro-rated self-only coverage limit for the remainder of the year. That total is $1,416.67. I divided $4,250 by 12 and multiplied by 4 for the number of months you will be on self-only coverage.

      If you add those two totals together ($5,633.33 + $1,416.67) you would get $7,050 which would be on of the spouse’s annual contribution limits for 2013. The other spouse can contribute the remainder. You will each be held liable to these limits for the year.

      I hope that answers your questions but please let me know if not.

      Paige

      • Thanks, I was doing good until the end. Would the two totals of $7,050, be my wife’s contribution? Do I get to contribute $1,416 for myself? I am assuming the family contribution can’t be claimed by both of us.

        • Hi Ross,

          I apologize for the confusion. Here it is in more basic terms:

          The total contribution limit for your family as a whole is $8,466.67. This means that you can split that amount however you like between the two accounts, BUT at least $1,000 has to be in each account to account for the catch-up contribution limit that you are each individually eligible for (assuming you are both 55+).

          If you or your wife contributes the $7,050 then yes, the other person is eligible to contribute the remainder of $1,416.67.

          I hope that clears it up!

          Paige

  65. My husband and I are covered under the same health insurance policy. We are both over 55 years old. We each have our own HSA account.

    For 2013, I contributed to my HSA account, the family contribution of $6,450 + $1,000 catch-up totalling $7,450 ….Into my husband’s HSA account, I contributed his catch-up amount of $1,000.

    Is that correct?

    • Hello Beth,

      Yes, that is correct. If you are both covered under a family high deductible health plan and are both 55+ then your annual 2013 contribution limit together is $8,450. However, you are correct that if you want to utilize both catch-up contributions then you have to each have your own HSA and contribute your $1,000 catch-up contributions to your own respective accounts.

      Let me know if you have questions!

      Paige

  66. Back again. Is it better for us to have separate medical and HSA’s since we work for the same employer? Right now we have it on my wifes, it’s $13 cheaper than if we went separate. The deductible for employee is $2000 or $4000 for employee and spouse. Right now we are almost at deductible, $4000. If we had separate insurance she would have been at deductible,$2000 and then coverage is 100%. I of course would still have to meet mine. Guess what I am thinking is since she uses insurance more than me would it be better financially to separate.

    • Hi Kelly,

      That’s not really a question that I can answer for you, being as though I am not aware of your situation and how many medical expenses you typically have within a year. All I can really tell you is what that would mean for your HSA if you were to be on separate insurance plans and here’s what I mean:

      If you were enrolled in a family coverage plan then your limit together would be $6,550 for 2014. If you were each on your own self only coverage plans separately, you would each be able to contribute up to $3,300 for the year, for a total of $6,600 (which is just slightly higher than the family contribution limit).

      This is also assuming that neither of you are 55+, in which case if you were, you are each eligible to contribute an additional $1,000 in catch-up contributions to your own individual accounts.

      I hope that clears it up on the HSA side of things, but unfortunately you will have to make a decision on which insurance plan to select for your family.

      Paige