Can my non working spouse have own HSA account?

[Big0taxes]

Me again!  THANK YOU to all who replied.  I confirmed with his HSA company that I can have my own HSA for the $1000 (over 55) contribution.  I will be checking with my bank to see if they offer this as that HSA company has a monthly service charge until the balance reaches $3000.  His employer pays his monthly service charges.

I also found this on the IRS website for 2021 Pub 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 can’t be more than $9,200. Each spouse must make the additional contribution to his or her own HSA."  For 2022 that will increase to $9,300. 

Again, THANK YOU!

[awalker3]

"For example, you can't contribute more than what you earn."

To be clear, "you" would be an individual when filing single or married filing separately; and otherwise for those married filing jointly "what you earn" would be as a couple, not as an individual.  Ergo, a non-working spouse who files married filing jointly may indeed contribute to his/her own individual HSA account and the couple still reap the tax benefit when filing their taxes jointly.

[NCperson]

@awalker3 - that is consistent with what is noted above.  But as @Opus 17 notes, if only one spouse is working, then the best strategy is for the working spouse to make the entire contribution* because there is no social security tax or medicare tax withheld on the contribution.

* if the non-working spouse is over 55 then that spouse has to have a separate HSA with up to a $1000 contribution to take advantage of the catch-up election. 

Stated alternatively, if both are over 55 years old and the non-working spouse contributes $7300 and the working spouse has $1000 withheld from their paychecks, that is inefficient.  Best to have the working spouse withhold $7300 from their paycheck (so there is no social security or medicare tax - saves about $500 in tax) and then the non-working spouse contributes to their own HSA of up to $1000.  The working spouse's W-2 will reflect the $7300 contribution and then there is a $1000 deduction on the tax return to reflect the non-working spouses contribution.

[Seamstress59]

Thank you.  

[awalker3]

Details are important, and general way(s) do not always apply/benefit/work for everyone.  Note that in the event that the working spouse starts taking SocSec and by default Medicare A and so is no longer eligible to contribute to an HSA, but the couple/family remains on a qualifying high ded medical plan, then the issue of FICA tax savings is a moot point.  The couple may still benefit from continued HSA eligibility via the non-working spouse and therefore may continue to fully take advantage of their enrollment in their HDP medical plan.  Furthermore, there are even workarounds for lost employer HSA contributions for that spouse on SS/MCA who is now ineligible for the HSA:  When/if the employer sets up an HRA for the employer to contribute to [longer explanation, specific HRA design separate from the employer’s other HRA account(s), but have seen this done successfully.]

Also, food for thought, is that saving on the FICA taxes impacts your future SocSec benefit which is based upon FICA taxable earnings…not always a desired effect, in particular for our highest earning years to be included in the SocSec benefit calculation. So, sometimes (timing is different for everyone) it behooves a couple to have the lower wage earner make the HSA contributions instead of the higher wage earner, such as when it is anticipated that the lower or no wage earner’s SocSec benefit will be less than half that of the higher wage earner’s SS benefit.

fine print:  I am not a tax or financial advisor.

[Big0taxes]

Since both of us are over 55 shouldn't it be:

Working spouse withhold $7300 + $1000 (over 55 add-on)

Non-working spouse contributes $1000 to own HSA

for a total of $9300?

[awalker3]

That’s a matter of opinion and a matter of what benefits your family the most.  If you want to max contribute the one requirement is that the $1,000 catch up contributions have to be via the separate individual’s HSA; but otherwise split the $7,300 between the two HSA accounts however it benefits you the most.  We have staff who during their last 5-10 years of employment (e.g. their highest salaries) chose to shift contributions to their non working or lower earning spouse so that the higher earner’s FICA earnings are higher so that their SocSec benefit will be higher, so they prefer to pay the FICA tax.  Note that I work in ministry so these are not 6 digit salaries.

[NCperson]

@Big0taxes = correct

and not that I am endorsing it but I was in the same situation and used Livelyme.com for the non-working spouse as there is no administrative fee. 

also - do not sign up for Medicare Part A until you lose private medical coverage from the working spouse.  Once the non-working spouse sign up for Part A, the non-working spouse is not eligble to contribute to the HSA. 

[Opus 17]

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@Big0taxes wrote:

Since both of us are over 55 shouldn't it be:

Working spouse withhold $7300 + $1000 (over 55 add-on)

Non-working spouse contributes $1000 to own HSA

for a total of $9300?

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Yes, that is allowed.

You could choose to have working spouse withhold less and non-working spouse contribute more, as long as your overall maximum is still $9300.  You may forego the social security savings if the working spouse contributes less from payroll. 

As suggested above, not everyone benefits from the social security savings (such as, if the working spouse earns more than $136,000).  Or, there might be financial or family politics reason to make the contributions more even.