HSA

[maury2]

Hi,

I am retired and don't work. My wife still working and have High Deductible Health Plan. I am with her HDHP as depended. She also have single Health Saving Account (HSA).

We do not want have family HSA.  Can I open single HSA , to increase my tax deduction?  

Thanks for your assistance,
Maury

[Mike9241]

since your wife's HDHP covers you you have a family HDHP. (IRS rule if one has family coverage both have family coverage) Thus the maximum HSA between the two of you (2-hsa accounts) is the family max of $7750, provided you are not covered by nonqualifying health insurance and neither is over 55. there is no such thing as a family HSA. They are individual accounts. so if your wife has an HSA in her name you can establish one in your name.  what you can contribute depends on what her's was for 2023.  So your max assuming the limit is 7750 is 7750 less what went into her plan for 2023. you have until 4/15/2024 to make your contribution for 2023

do realize that nothing is gained from a tax standpoint by having two HSAs. since with family coverage your wife can contribute the max to her account (either through her employer and if the max is not reached, she can make personal contributions. Her HSA can be used to pay for your medical expenses. 

there might be a downside to having two a/c's if there were fees for maintaining the accounts.  

[maury2]

Thank you for your explanation regarding HSAs. My second question pertains to the catch-up contribution of $1,000 available to individuals aged 55 or older. Both my wife and I are over the age of 55. However, under our family HSA, the catch-up contribution is only $1,000 total. If we were to each have our own single HSAs, would we be eligible to contribute $1,000 to each account for a total catch-up contribution of $2,000? Am I correct in this understanding?

[MayaD]

If you're married and both you and your spouse have separate HSAs, each of you are eligible to make $1,000 catch-up contributions.

Rules for Married People

The rules for married people apply only if both spouses are eligible individuals. If either spouse has family HDHP coverage, the family contribution limit applies; both spouses are treated as having family HDHP coverage.

If both spouses are 55 or older and not enrolled in Medicare:

• Each spouse is entitled to increase his or her contribution limit with an additional contribution.
• Their maximum total contributions under family HDHP coverage would include a catch-up contribution for each spouse.
• The contribution limit is divided between the spouses by agreement. If there is no agreement, the contribution limit is split equally between the spouses.
• Any additional contribution for age 55 or over must be made by each spouse to his or her own HSA.

HSA Limits on contributions

[Opus 17]

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@maury2 wrote:

Thank you for your explanation regarding HSAs. My second question pertains to the catch-up contribution of $1,000 available to individuals aged 55 or older. Both my wife and I are over the age of 55. However, under our family HSA, the catch-up contribution is only $1,000 total. If we were to each have our own single HSAs, would we be eligible to contribute $1,000 to each account for a total catch-up contribution of $2,000? Am I correct in this understanding?

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Let's go back one step.

There is no such thing as a "family HSA."  An HSA is a bank account or financial account that is owned by one person and one person only, there are no joint or family HSAs.  You might have family insurance coverage that makes you eligible to contribute to an HSA, but the HSA itself is owned by a single individual.

With that out of the way, if you are "covered" by a family HDHP and you have no other medical coverage (like Medicare or Medicaid) then you can contribute to an HSA, even if you aren't the "owner" of the HDHP.  Your overall family limit for 2023 is $7750, and each person over age 55 gets an individual $1000 catch-up contribution.

That means that your wife can contribute $8850, and you can contribute $1000, or you could each contribute $4875, or almost any other combination—you can divide the $7750 any way you like and the $1000 is individual.

If you don't currently own an HSA in your name, you could open one and make contributions up to April 15, 2024, and have it count as a retroactive 2023 contribution that would give you a tax deduction on your 2023 return.  Then you could go on making 2024 contributions and so on, until you stop being covered by the HDHP, or start being covered by other insurance that makes you ineligible, like Medicare. 

[maury2]

It's interesting that my wife's company only allowed her to make the catch-up contribution of $1,000, and not me, even though I am retired. The reason they didn't allow it was because I am not their employee. We have a family health  insurance.

[maury2]

It's intriguing that my wife's company permitted her to make the catch-up contribution of $1,000, while I, as a retiree, was not afforded the same opportunity. Their rationale was that I am not their employee. However, since we have family health insurance, I'm puzzled as to why I cannot make my catch-up contribution.

[Opus 17]

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@maury2 wrote:

It's interesting that my wife's company only allowed her to make the catch-up contribution of $1,000, and not me, even though I am retired. The reason they didn't allow it was because I am not their employee. We have a family health  insurance.

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The HSA contributions are part of an employee benefits package under what's called Section 125.  Any contribution by the employer, whether it is free money from the employer or a contribution by the employee, is considered an employer contribution.  The employee agrees to a voluntary salary reduction, and the employer sends that money to the HSA account.  Since you are not an employee, there is no legal way for the employer to put money into your HSA account, regardless of whether you are asking for free money from the employer or you are asking the employer to deposit your own money.  

Also, as mentioned, HSA accounts are owned by one person only.  Your wife's limit that can be deposited into her HSA is $7750 plus $1000.  Your $1000 catch-up contribution can only be deposited into an HSA account in your name.

If you don't currently own an HSA account in your own name and want to take advantage of the tax deduction you can open a private HSA account at many banks. It does not have to be through an employer.  Check with the bank that has your regular checking account, they probably offer private HSAs.