Straddling enrollment periods, trying to get an HSA for each if possible (one is closer to Medicare-coverage)

[W16VA]

I am too close to Medicare-coverage, with typical FSA for family (soon self and spouse),  and typical open Enroll in Dec.  Too late to build up HSA, would do one year contribution if I can figure out how.

My wife wishes to get her own HDHP and start an HSA, when open Enroll comes Aug (academic schedule).

Is there anything we can start planning for, beyond saving money for the first HSA contribution(s), would that be the max for Indv or Family for her? 

Once she gets the HSA, if family max allowed, I might not sign up for anything on my Enroll. 

Other recommendations would be much appreciated !!

[BillM223]

As you know, neither you nor your spouse can contribute to an HSA, so long as either one of you has FSA coverage.

So I am not sure if I understood you, but if you have an FSA now, your wife cannot contribute to an HSA this year, even if she gets an HDHP policy in August.

OK, how about next year, when I presume that you will be clear of the FSA?

One way to do the maximum contribution for an HSA is to do an HSA Funding Distribution (HFD). This is a one-time transfer from an IRA to an HSA, done by the IRA custodian. Note that this distribution counts against your annual HSA contribution limit, so if your annual HSA contribution limit is $9,550 ($8,550 for Family coverage and $1,000 for additional contribution for being 55+), then the most you can transfer from IRA to HSA is $9,550. In the case, you would not contribute anything else.

Other notes: The IRA being used must belong to the HSA owner. Also, if you do an HFD, you must keep the HDHP coverage for the next year (from the start date of the transfer)., or else you will pay penalties and additional taxes.

"Once she gets the HSA, if family max allowed, I might not sign up for anything on my Enroll. " - you must not sign up for FSA coverage, because in that case, neither one of you could contribute to the HSA.

There are a very few exceptions to having other health coverage in addition to having HDHP coverage. You can read about them in PUB 969, page 5 under "Other health coverage".

[W16VA]

Thank you, Bill!  You read between my words for 80% of the issue.  Let me try to get you the next 10%.

We should have thought of this at least one year earlier, due to the difference in our annual enrollment cycles. Now that turbulences in the economy force us to quickly learn and digest all this technical legal info, we have to find how we can get to a workable plan for our future health expenses.

1.  I am receiving SSA distribution somewhere in April 2026, an unmovable event.  This December open Enroll, I would sign up for Aetna HDHP, so I can open an HSA.  But I cannot count on the following year contributions, because I might not have a job after that and am now being restricted for being under Medicare.  Unless I keep my job, surviving through a couple more years in this new economy.

2.  My wife has not had any health plan since having been covered through my FSA all along.  But her annual Open Enrollment is in August, so we'll be paying extra a few months once her HDHP starts then.  Her SSA future is at least 6 years away.

3.  Is there any requirement for an IRA, to be opened/owned properly so it can be used for funding each HSA? my wife has a SEP and a Contributory (regular) one, but I have only a Deferred Income plan 457b at that point.

So, anything else you come up for that last 10% of my puzzle would be very welcomed!

Thank you again,

-Willis

[BillM223]

You can do a "partial" rollover from your 457b to an IRA, if your 457b administrator agrees to it. This would normally be a direct trustee-to-trustee transfer (which is why the administrator would have to agree to it). If you tried to do the 60-day rollover (take the money out and within 60 days put it in an IRA), then the plan administrator would have to withhold 20%, but you would have to contribute 100% to the IRA, meaning that you would have to come up with that 20%.

As for your spouse, she can make a HFD (HSA Funding Distribution) to her HSA from an inactive SEP, but only if it is inactive. That means that no contributions to this accounts have been made within the current tax year.

[W16VA]

Thank you, Bill! 

In addition to being introduced to and made aware of the new acronyms in this complex alphabet soup of legal and financial benefit, I truly appreciate the value of expertise and experience shared by members like yourself.

The community could definitely benefit from such advice by avoiding my scenario, if there is any straddling of coverage, and planning to act earlier, for related looking-back requirements.

I am trying to catch up, but certainly would not be ready before time is up!   

1.  Should I, at January, on my year 70 (2026), get an Individual FSA plan or no coverage at all to free up my wife for her own HSA until August 2026, when we get coverage from my wife's new HSA plan? (see related item 5 and 6 below.)

2.  If so, that would require my wife to sign up in August 2025, for a simple FSA to cover both of us until 2026.

3.  Can my wife, in August 2026, apply for her own individual HSA, independent of any plan I may have

4.  Can she then apply for family HSA to get our combined limits, provided that I have no coverage?  or provided that I'm not under FSA, nor Medicare (full SSA) by that August 2026.

5.  Assuming that my wife got an HSA in August 2026, when is the time to factor in my own Medicare retro-active  '6-mo looking back'  

6.  Since SSA will pay only a maximum of six months of retroactive benefits, would asking for such delay, receiving say in January 2027 (my year 71), help at all in this quest, be at all related to Under-Medicare-effective, or be even possible

7.  If I am able to carry out the delay from step 6, is there any other timing that influences, preventing me from getting a family HSA in January 2027? 

There is a lot of knowledge to master, to guess whether the benefits are possible and outweigh all the efforts, but the amount of technical literature you have covered and what we can learn from your experience is certainly invaluable.  

My oversight by being late to this complex opportunity keeps us out of this HSA benefit, but there is any way if I can stay out of this picture, perhaps I can help her, and not denying her own chance sooner.

Gratefully and best regards!

-Willis

[BillM223]

1. There is no such thing as an individual FSA. All FSAs cover both spouses. So in January 2026 (or whenever) neither one of you should sign up for the FSA.

2. Don't sign up in August for anything except HDHP coverage.

3. Your wife can open her own HSA the moment she is eligible to (i.e., has HDHP coverage and no conflicting coverage). NOTE: she SHOULD open her own HSA as soon as she is eligible. This is because there is a $1,000 increase in the HSA contribution limit for those who are 55+, but only the person who owns the HSA can contribute this amount. Therefore, after you are on Medicare, she HAS to have her own HSA in order to be able to utilize this benefit.

4. There is no such thing as a Family HSA. It's the HDHP policy that is Family or Self-only.  An HSA is similar to an IRA in that it is owned by one taxpayer.

5. Given what I have just said, this question doesn't make sense. I have already told you what the Medicare up to 6 month look back means.

6. Are you going to start Social Security at some point (like at age 70 when benefits stop increasing)? When you start SS, then the SSA will sign you up for Medicare Part A whether you like it or not. This will be the end of you being able to contribute to your HSA.

7. As I noted above, it is the HDHP that is Family, not the HSA. If your spouse has any dependents, then your spouse can get a Family HDHP policy, without regard to you.

NOTE, even after you go on Medicare, you can still pay for qualified medical expenses for either one of you, it's just that you can't contribute to the HSA any longer.

P.S. I am a TurboTax seasonal employee and an Enrolled Agent...I have answered perhaps 9,000 HSA questions in the last 9 years. Thank you for being thoughtful.

[Opus 17 · Accepted solution]

If your spouse is covered by an HDHP, and has no other disqualifying coverage, she can contribute to an HSA.  She does not have to be the "owner" of the HDHP, she just has to be covered by it.

If you are past age 65, your Medicare enrollment will be retroactive by 6 months.  e.g. if you sign up for Medicare in August 2026, your enrollment will be retroactive to February 1, 2026.  Enrollment in Medicare makes you ineligible to contribute to an HSA.  It does not make your spouse ineligible to contribute, as long as she is covered by an HDHP without other coverage. 

There's no real point in using an IRA to fund an HSA because your contribution is still limited by the usual rules.  In other words, if you are only eligible for one month in 2026 (because medicare starts Feb 1), you could only fund your HSA to the tune of 1/12th of the 2026 limit, regardless of whether you fund it by direct contribution or rollover.  You can't roll over an entire $9000+ if you are not eligible for that much.  

Receiving SSA benefits does not make you ineligible to contribute, it's Medicare enrollment that does it.

No one "applies" for an HSA, you just open the account and make contributions.  There is no such thing as a family or self HSA. It's just a bank account.  You can only make contributions if you have an eligible HDHP, and the amount you contribute to the HSA depends on what kind of HDHP you are covered by. 

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I don't think you told us when you plan to enroll in Medicare, that's a key date.  Generally, you will pay a large financial penalty for late enrollment unless you are covered by a workplace plan that provides as good or better coverage.

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As to your wife,

She can contribute to an HSA starting January 1, 2026, assuming the following facts are true:

1. She is covered by an HDHP (either her own single policy, a family policy under her name, or a family policy under your name)
2. She has no "other" medical coverage.  That means no medical FSA from her employer OR YOUR employer.  Or, she or you can have a "post-deductible FSA" (a special kind of FSA that can't be used until you meet all your deductibles).  Or, she or you can have a "limited purpose FSA" (a different kind of special FSA that only covers items that are not covered by a typical HDHP, such as certain dental and vision care expenses).  

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As to yourself, you can contribute to an HSA if you are "covered" by an HDHP (your own single plan, your own family plan, or your spouse's family plan), and have no other disqualifying coverage.  Your contribution limits will be affected by your eventual Medicare enrollment, you need to include that date in your planning.  

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1.  Should I, at January, on my year 70 (2026), get an Individual FSA plan or no coverage at all.

No FSA.  If you want to contribute to an HSA, you need to be covered by an HDHP (single or family) with no other coverage. 

2.  If so, that would require my wife to sign up in August 2025, for a simple FSA to cover both of us until 2026.

No FSA.  Because of your wife's plan year being August--July, if she enrolls in an FSA in August of 2025, that will make both of you ineligible for HSA contributions until at least August 2026.

3.  Can my wife, in August 2026, apply for her own individual HSA, independent of any plan I may have

No one "applies" for an HSA.  She can contribute when and if she is covered by an HDHP and has no other coverage. 

4.  Can she then apply for family HSA to get our combined limits, provided that I have no coverage?  or provided that I'm not under FSA, nor Medicare (full SSA) by that August 2026.

No one "applies" for an HSA. She can contribute when and if she is covered by an HDHP and has no other coverage.  She can contribute up to the family maximum if she is covered by a family HDHP, either under her name or your name.  

5.  Assuming that my wife got an HSA in August 2026, when is the time to factor in my own Medicare retro-active  '6-mo looking back'  

Your contributions to a HSA will be limited based on when you enroll in Medicare.  That will not affect your wife's contribution limits, which are determined by what kind of coverage she has.  

6.  Since SSA will pay only a maximum of six months of retroactive benefits, would asking for such delay, receiving say in January 2027 (my year 71), help at all in this quest, be at all related to Under-Medicare-effective, or be even possible

You need to talk to a financial planner.  There are too many moving parts.  However, declaring your retirement benefit is not, by itself, a disqualifying factor.  What counts is enrollment in Medicare.  You will pay a substantial penalty if you delay Medicare enrollment without having comparable coverage in place.  Those penalties might outweigh any tax savings from the HSA. 

7.  If I am able to carry out the delay from step 6, is there any other timing that influences, preventing me from getting a family HSA in January 2027? 

An HSA is just a bank account. What matters is that you can't contribute unless you have qualifying HDHP medical coverage (from yourself or your spouse) and no other disqualifying coverage, such as Medicare.

[Opus 17]

Can we start over?  Some basic questions:

1. How old are you?

2. When do you plan to start Medicare coverage?

3. How old is your wife?

4. When does your wife plan to start Medicare coverage?

5. Can your wife enroll in an HDHP in August, 2025 without an FSA?  Would that HDHP be self-only or family (self plus her spouse)?

6. Can you enroll in an HDHP in Jan, 2026 without an FSA?  Would that HDHP be self-only or family (self plus your spouse)?

[W16VA]

Thank you, Opus17, for your elaboration!

1. How old are you?
- 70 in December 2025
2. When do you plan to start Medicare coverage?
- Still on company FSA, but likely no more as of Jan 1, 26, to free up my wife’s eligibility for HSA later by April/May 2026 (school calendar). That open enrollment period becomes effective on July 1st.
The reason I hope to influence a delay in Medicare coverage and the lookback period is my (erroneous) assumption that if I request and get a delay receiving SSA payments, it may give me extra time in the first 6 months of 2026.

-Best,
3. How old is your wife?
- 63 in September 2025
4. When does your wife plan to start Medicare coverage?
She may delay that once she gets an adequate HSA to lean on, or until being forced to stop further contributions. Once I am on SSA, her income level likely does not warrant much tax saving from HSA deduction.
5. Can your wife enroll in an HDHP in August 2025 without an FSA? Would that HDHP be self-only or family (self plus her spouse)?
She would, but currently being dependent on my 2025 FSA excludes that possibility. If she could, she would like as HSA-family, since there is at least me and one likely dependent on her next 3 years returns.
6. Can you enroll in an HDHP in January 2026 without an FSA? Would that HDHP be self-only or family (self plus your spouse)?
If I can, I’d have an HSA in January 2026 (for myself, with my wife as a beneficiary), provided that I’m cleared from the Medicare lookback, and can I delay receiving my SSA benefits past October 2026?

So, my HSA is not as important in my future compared to my wife’s.

[Opus 17]

@W16VA 

Some of this is still unclear.

2. When do you plan to start Medicare coverage?

- Still on company FSA, but likely no more as of Jan 1, 26, to free up my wife’s eligibility for HSA later by April/May 2026 (school calendar). That open enrollment period becomes effective on July 1st.

This is unclear.  An FSA is only one component of a company medical plan.  You might have an HDHP,  a PPO, an HMO, or something else, all of which could have an FSA as part of it.  If you go off the company plan completely in January 1, 2026, what would your wife's medical plan be?  Do you want to stay on the company plan?  That's up to you and the company, you just have to be on a plan that does not have an FSA.

5. Can your wife enroll in an HDHP in August 2025 without an FSA? Would that HDHP be self-only or family (self plus her spouse)?
She would, but currently being dependent on my 2025 FSA excludes that possibility. If she could, she would like as HSA-family, since there is at least me and one likely dependent on her next 3 years returns.

This makes no sense to me.  An FSA can defer a maximum of $3,300.  That does not seem like something she can "rely on."  Do you mean she relies on your primary insurance policy from work, which contains an FSA as part of the overall medical benefit?    Also, an HSA is a bank account, not an insurance plan.  It could be an HSA-eligible plan (which is also known as an HDHP), but your terminology is confusing.

I just clarified that Medicare is mandatory when you take your SS benefit.  If your benefit must start no later than October 2026, then Medicare enrollment will be effective no later than April 1, 2026.  That means that, no matter how you jigger the system, the most you could contribute to an HSA in your name is nothing in 2025 and 3 months worth in 2026, or about $2400 (depending on what the 2026 limit is).  

I'm still not clear on why your wife can't take an HSA-eligible insurance plan in August 2025.  But let's leave that as an established fact and move on.

++++++++++

You want to maneuver your health coverage so that, as of August 2026, your wife has a family HDHP that is HSA-eligible, and no one has any FSA.  That means you do not take a new FSA once your current FSA ends on 12/31/2025.   You can have any health care coverage you want in 2026, as long as it does not have an FSA, and as long as it will not cover your wife after you start Medicare.  Your wife can enroll in any medical coverage for August 2025 that is convenient for you both, as long as starting August 2026, she is enrolled in a family HDHP with no FSA.

In that situation, and assuming your wife will maintain her HSA-eligible insurance for all of 2027, your wife can contribute the maximum in 2026 using the last month rule.  That would be about $8800 family limit plus $1000 personal catch-up amount.    ($8800 is a guess, the 2026 limits have not been announced yet.). Your wife could also contribute about $10,000 for 2027.  ($9000 family limit plus $1000 personal catch-up).  Then you'll have to make new plans when August 2027 rolls around and you decide what you want to do going forward.  (If she goes off the HSA-eligible plan in August 2027, that will reduce her eligible contributions for 2027, but that discussion can be saved for later.)

If you had HSA-eligible insurance for 2026, you could contribute to an HSA as well, because you would have 3 months eligibility.  You could contribute $250 of your personal catch-up amount.   You could also contribute up to $1,100 of the single limit, or $2,200 of the family limit, although those contributions reduce your wife's eligibility because they come out of the same family limit pool.  As a practical matter, if your wife maximized her contributions, the only extra you can contribute by having your own HSA is $250.  

[W16VA]

RE: Why wife can't take an HSA-eligible insurance plan in August 2025

Bill and Opus17, for being late in my learning, I apologize for taking your precious time.

I just looked up my Medicare account, and I am no longer an HSA-hopeful.  (All work and no savviness makes me an HSA-deficient partner!)  Even while I am still working and have been on my company health plan the past 5 years, the minute I received that Card, no more talk of HSA applies to me.

The way things now look, the only thing I should focus on is to minimize that impact on my wife’s eligibility in 2026.

My wife has been dependent on my company's non-HDHP health plan, which ends this December 2025.
I assume she cannot enroll into a HDHP plan by herself, at the start of 2026, to be independent of her work's open enrollment later in July 2026.

I will study your other useful, detailed suggestions to apply once my wife gets to enroll in her own HDHP.  
For me, the straddling coverage / dependency is indeed a puzzle once one partner gets locked into Medicare.

Thank you!

[Opus 17]

@W16VA 

I assume she cannot enroll into a HDHP plan by herself, at the start of 2026, to be independent of her work's open enrollment later in July 2026.

You should verify this with your wife's employer.  An employee is almost always allowed to change their insurance outside of the normal enrollment period in response to a "qualifying life event."   Losing her insurance (because your insurance will end 12/31/2025) is almost always a qualifying life event.  No matter what she chooses for her workplace plan in August 2025, she can probably re-enroll in something different effective 1/1/26, based on the "life event" of losing your coverage.