My emp offers an HSA, but I'd like better investment options. My wife is eligible for Medicare disability, but we have always used that as secondary coverage. Options?

[daniel6]

Can I open an HSA with a third party, carry a High Deductible plan through my employer, and have Medicare pick up some of my wife's medical expenses?

[daniel6]

Does my wife still get to use my coverage or is she now medicare only?

[ghost]

She can use the HD policy. You may even pay for her out of pocket medical expenses from YOUR HSA. She is only prohibited from contributing to her own HSA because of the Medicare eligibility.

[daniel6]

Thanks!

[ghost]

You're welcome.

[SweetieJean]

"My wife is eligible for Medicare disability, but we have always used that as secondary coverage"
<a rel="nofollow" target="_blank" href="https://www.medicare.gov/supplement-other-insurance/how-medicare-works-with-other-insurance/who-pays...>

[ghost · Accepted solution]

"Can I open an HSA with a third party, carry a High Deductible plan through my employer, and have Medicare pick up some of my wife's medical expenses?"

Yes. As long as you are covered solely by the HSA compatible HDHP, you can have as many HSAs in YOUR name as you like and contribute to any or all of them where the aggregate total contribution is within the limit amount.
Your spouse cannot make contributions to a HSA in HER name because her Medicare enrollment prohibits it..

[TaxGuyBill]

However, I suspect you will be better off with the HSA through your employer.

When you contribute to an HSA separately, you save income taxes.  When you contribute through your employers plan/HSA, you save both income tax AND Social Security/Medicare tax (7.65%).  It would be unusual for the "better investment options" to overcome the 7.65% you would be saving through your employer.

[dmertz]

HSA funds can be moved by trustee-to-trustee transfer (provided that the HSA agreement does not limit transfers).  You could make your contributions through your employer's cafeteria plan, avoiding Social Security and Medicare taxes, then periodically transfer the balance to a different HSA.  However, some HSA custodians charge a fee to make a trustee-to-trustee transfer.  (Be sure that any movement of the funds is done by trustee-to-trustee transfer, not by distribution and rollover.  Movements of funds by distribution and rollover are limited to one in any 12-month period.)

[ghost]

@TaxGuyBill good point unless he can get his employer to direct his pretax contribution to an alternate HSA without cost.

[TaxGuyBill]

The trouble with that is that in order to escape FICA, it needs to be part of the "cafeteria plan" (§125 plan).  I am not sure of the details, but the OP would need to make sure it was still part of the cafeteria plan (to not pay FICA), rather than just a direct deposit in to another account (which would be subject to FICA).

[ghost]

You're probably correct.

[SweetieJean]

@daniel  Please confirm that your wife is on Medicare, and not Medicaid.

[daniel6]

That's correct. She receives Medicare and we currently use it as her secondary coverage after my silver plan through my employer.