Maximum HSA contribution

[Xian2]

I am 65 starting with Medicare in Sep. my wife is 64 starting Medicare next year in Nov

we are both retired and have a High Ded healthinsurance through the marketplace

I have an HSA, which I carried over from work and my wife does not have an HSA

we have been axing out HSA contribution the last few years, and I like to continue even into next year until my wife goes on Medicare,so I opened a new HSA for her- for this and next year

I want to make sure I am maxing out our contributions, and here is my math

For my HSA this year : family contribution max 7750 plus 1x catch up 1000 = 8750, prorated for 8 months =8750/12*8 = 5833;  for my wife's HSA, Individual max 3850 plus 1000 catch up = 4850, prorated for 4 months of year = 4850/12*4 = 1616.  Then Next year - (lets assume same limits as 2023 for the math) - my wife can contribute max Ind 3850 plus 1000 catchup = 4850 prorated for 10 months = 4850/12*10 = 4041

is this correct or can next year calculation be based on family contribution max (even so I am on Medicare?

I assume the catch up contribution only applies once to the HSA owner, and cant be 2x1000 for both of us?

thanks for any help validating

[Opus 17]

No. Your overall family limit is $7750 with prorate, you and your wife each have a $1000 limit that is individually pro-rated, but your combined limit can't be more than the family limit.  Your wife does not get an extra $4850.

Let's also start by clarifying that, if you enroll in Medicare from 3 months before to 3 months after your 65th birthday, Medicare takes effect on the 1st day of the month in which your 65th birthday occurs.  But if you delay Medicare, your enrollment date is backdated by up to 6 months.

So let's assume you turn 65 during September 2023, and your Medicare enrollment is September 1, and that your wife's Medicare enrollment will be November 1, 2024.

Lastly, we need to know if you will be keeping the marketplace family plan, or dropping the family plan and changing over to an individual plan for your wife when you enroll.  It seems like that is your plan, but you are not clear.

Assuming all the above, your personal contribution limit for 2023 is $5166 plus $666 = $5832.  

However, your wife's contribution limit is 

7750/12 x 8 = $5166 (8 months covered by a family plan)

plus 3850/12 x 4 = $1283 (4 months covered by a single plan)

plus $1000 catch up

equals $7449.

Your wife's contribution limits are also calculated from the type of coverage that she has on the first day of each month, even if the policy that covers her is in someone else's name.

The tricky step is that your maximum combined contribution is $6449, plus $1000 catchup for her and $666 catchup for you.  That's based on her maximum eligibility given that she is changing coverage mid-year.  You can split those amounts any way you like, except that the catch-up portion can only be contributed to that spouse's account.  If you contribute $5832 to your account (5166 + 666), then your wife can contribute $1617 ($6449 minus $5832 plus $1000).  Or you could contribute $666 and your wife could contribute $7449. Or almost any other combination.

Then for 2024, assuming you did drop the family coverage and convert to individual, and she is eligible for 10 months, your calculation is correct except the 2024 individual limit will be raised to $4150, so her eligible limit will be $4291.

[dmertz]

"You can split those amounts any way you like."

Not quite.  The 8-month pro-rated family limit of $5,166 can be split any way you like, but your $666 catchup must be contributed to your HSA and the 4-month pro-rated single limit of $1,283 plus your wife's $1,000 catchup must be contributed to her HSA, not to your HSA.

[Opus 17]

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@dmertz wrote:

"You can split those amounts any way you like."

Not quite.  The 8-month pro-rated family limit of $5,166 can be split any way you like, but your $666 catchup must be contributed to your HSA and the 4-month pro-rated single limit of $1,283 plus your wife's $1,000 catchup must be contributed to her HSA, not to your HSA.

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Yes.  I had to recalculate several times after re-reading the question and trying to determine which assumptions to make about the original taxpayer's plans for insurance coverage.  That caveat got left off.

Also note that, if you were going to keep the family coverage Marketplace plan after going on Medicare, your wife's limits would be calculated differently and would be higher. 

[NCperson]

and through all that math, it simply means that is the maximum contribution for the YEAR; it doesn't mean you have to make the contribution prior to Sept 1 when you become Medicare eligible and HSA contribution ineligible.  

[Opus 17]

"is this correct or can next year calculation be based on family contribution max (even so I am on Medicare?"

Your limit is based on whether you are covered by a family HDHP or a single HDPH.  When you go on Medicare, you are ineligible to contribute to the HSA, even if you keep the Marketplace coverage as well.

Your wife's limit is based on whether she is covered by a family HDHP or a single HDPH. She only has to be covered, not be the owner of the policy.  She is covered by a family plan at least through August 31, 2023, and then she will either be covered by a single plan (if you drop your coverage when you enroll in Medicare) or she will be covered by a family plan (if you keep your Marketplace family plan even after you go on Medicare.)  Her eligibility is not affected if you become ineligible, as long as she is still covered by an eligible plan and is not enrolled in Medicare.

If you do decide the keep the family HDHP Marketplace plan on top of Medicare and it covers your wife after you turn 65, her limits will need to be recalculated.  I assumed you would drop your HDHP coverage and switch to a single plan for your wife. 

[Xian2]

thanks so much everybody.... my wife will start an Ind high Deducible plan in Sep this year (cutting the current premium in half)..  so final result is that I will contribute 5832 this year, my wife will do 1616 in her account this year ..and next year she can contribute 4291

thank you all !!!

[Xian2]

and actually while rereading it.. I think I got it wrong.. the total contribution this year is correct, but I think you are saying the split is different - I can ONLY do 5166 and my wife can do the rest 2283 ??

if thats correct, then I actually need to contact the HSA Admin- as I actually contributed 5833 to my account earlier this year...... is it true that my incorrect split will cause issues with filing taxes next year?

[Opus 17]

@Xian2 

I think you confused yourself.  Your contribution limit is $5166 based on the pro-rated family cap of $7750, plus $666 based on your pro-rated $1000 catch up contribution, for a total of  $5832.  ($5833 is also correct, up just rounded up and I rounded down.)

[Xian2]

yes, I was and maybe am still confused..... because DMERTZ said   ... " the 4-month pro-rated single limit of $1,283 plus your wife's $1,000 catchup must be contributed to her HSA, not to your HSA."...

so if my wife has to contribute 2283 into her HSA this year.. then sine our max together is the 7450.. this would leave my max contribution to 5166..... and since I already paid 5833 into my HSA would have overpaid ?

did I misunderstand what dmertz said ?

bottomline - will I be ok contributing 5833 to my hsa and my wife 1616 to her hsa this year?

[dmertz]

You each are eligible for a catchup contribution.  Your catchup contribution of $667 ($666 rounded up) added to the family limit of $5,166 equals the $5,833 that you have contributed to you HSA.  Your wife can contribute $1,283 plus her $1000 catchup to her HSA for a total of $2,283 to her HSA.  The combined total is $8,116.

The $7,449 amount that Opus 17 mentioned is the amount that your wife could contribute to her HSA if all $5,183 of the family limit was allocated to her HSA instead of to your HSA, leaving you with only your $667 catchup that you could contribute to your HSA.  $7,449 plus $667 equals $8,116.

[Opus 17]

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@Xian2 wrote:

yes, I was and maybe am still confused..... because DMERTZ said   ... " the 4-month pro-rated single limit of $1,283 plus your wife's $1,000 catchup must be contributed to her HSA, not to your HSA."...

so if my wife has to contribute 2283 into her HSA this year.. then sine our max together is the 7450.. this would leave my max contribution to 5166..... and since I already paid 5833 into my HSA would have overpaid ?

did I misunderstand what dmertz said ?

bottomline - will I be ok contributing 5833 to my hsa and my wife 1616 to her hsa this year?

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My numbers were all correct, the issue was with my comment "you can split up the contributions any way you like" which is not quite accurate, although my examples were accurate.

Your personal limit is $5166+$666=$5832 (or $5833, depending on how you round off the fractions).

Your wife's personal limit is $6449+$1000=$7449.

Your overall combined family limit is $6449+$666+$1000=$8115.

If you wanted to, you could divide up the $5166 portion between the two of you in any way you choose (because you share that limit).  The $1283 portion that comes from your wife's 4 months of single coverage can only be put in your wife's account (because it is part of your wife's limit but not yours).  The $666 and $1000 catch-up contributions can only be put in the person's account for whom the catch-up applies.

If you choose to contribute your full maximum to your account ($5166+$666=$5832) then your wife's maximum eligibility is $1283+$1000=$2283. 

[Xian2]

k, thanks so much for claification

in summary: I can keep my 5883 contribution, and my wife can contribute 2283, because her catchup of 1000 does not need to be prorated (which was my original mistake in initial posting)

thanks for all your help

cheers