HSA with spouse on second insurance

[Roy281]

My wife and I are currently on HDHP health insurance with HSA through my employer. In 2021, my wife will get employer paid for health insurance through her job that does not qualify for an HSA.

Can I keep her on my HDHP insurance, but just ensure I contribute under $3600 to my HSA? I am not sure if I need to fully remove her from my insurance, or if I can just contribute up to the individual limit.

[Opus 17 · Accepted solution]

If your only coverage is a qualifying family HDHP, then you can still contribute the family maximum, which is $7200 next year.

Remember that each HSA account is owned by an individual, there are no joint or family accounts. Your ability to contribute to your account only depends on your eligibility.

If you continue to carry your spouse on your family plan it will probably act as secondary coverage to her own plan. That does not affect your eligibility, but it may affect your premiums.  If you decided to take her off your plan to save premium dollars, that would make your plan self-only (unless you are also covering children) and that would reduce your contribution limit to the self-only value.

What you really have to make sure of is that you do not have any secondary coverage from your wife’s new job. You can’t be covered under her insurance and she also cannot take a regular flexible spending account or FSA if it is offered.  The FSA can be used to pay for expenses for the covered person, or their spouse, so that means that if she has an FSA, it is disqualifying coverage for you.  She can have a “limited purpose FSA“ that covers certain items not traditionally covered by insurance and that does not count as disqualifying coverage for you. A limited purpose FSA can pay for braces, vision care, and certain other items but not routine medical care. If she is eligible for an FSA, she will have to review the options at her new job before signing up.  If she is offered an HRA, it must not cover you.  

[Anonymous]

if you and/or her have family coverage both are treated as having family coverage.  then you have to look at the deductible under your health plan and her health plan.  the lower of the two must be used to determine if both of you are covered by a HDHP.  if not then neither can contribute to an HSA because of the family coverage rule. so your HDHP can not have family coverage and neither can hers if you want to contribute to your HSA under self-only coverage.   

you did not say why your spouse would be HSA ineligible. if your spouse was not eligible for a HSA because she had a FSA a/c, then if that FSA CAN be used to pay your doctor or hospital bills then you have non-HDHP coverage which disqualifies you from contributing to an HSA. if her plan is non-HDHP and covers you that also disqualifies you from contributing to an HSA 

[Opus 17]

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@Anonymous wrote:

if you and/or her have family coverage both are treated as having family coverage.  then you have to look at the deductible under your health plan and her health plan.  the lower of the two must be used to determine if both of you are covered by a HDHP.  if not then neither can contribute to an HSA because of the family coverage rule. so your HDHP can not have family coverage and neither can hers if you want to contribute to your HSA under self-only coverage.   

This is confusing, and I may not understand what you are trying to say, but I think you are wrong.  The taxpayer does not become ineligible if his spouse's health insurance has a low deductible, so long as the taxpayer is not a covered person on the spouse's plan.  The IRS simply says,

"However, you can still be an eligible individual even if your spouse has non-HDHP coverage, provided you aren’t covered by that plan."  (Presumably, it is common that the reason the spouse's medical coverage does not meet the eligibility test is that it has lower deductibles.)  No such testing as you describe is required, as long as the taxpayer's spouse has self-only coverage.

See analysis here,

https://americanfidelity.com/blog/reimburse/hsa-mistakes-spouse

https://www.thefreelibrary.com/HSA+eligibility+when+spouse+has+non-HDHP+family+coverage.-a0133082216

[dmertz]

If one spouse has family coverage, both spouses are treated as having family coverage only if both spouses are HSA-eligible individuals because both are covered by qualifying HDHP plans (one has family HDHP coverage and the other has either family or self-only HDHP coverage) and have no disqualifying coverage.  In this case your wife will not be eligible to make an HSA contribution to her HSA, only you will be eligible to contribute to your HSA (up to the family limit if you maintain the family HDHP coverage the entire year).