What is maximum HSA deduction in 2018 for family coverage over 55 but one member will be covered by Medicare Part A in March 2018?

[shani53]

I will turn 65 next March and will have to enroll in Medicare Part A. I will still be working and covered under my company's medical plan as well. What is my maximum allowable HSA contribution for family coverage in 2018 limited to $1,16.67 i.e., (6900+1000) x 2/12? Does it matters that my wife will still be under 65?"

[dmertz · Accepted solution]

The maximum you can contribute to your HSA is ($6,900 regular family contribution + $1,000 catch-up contribution) * 2  / 12 = $1,316.67.  Assuming that your wife is an eligible individual the entire year, the maximum that your wife can contribute to her HSA is $6,900 regular family contribution + $1,000 catch-up contribution = $7,900.  However, the maximum combined regular family contributions to both HSA accounts cannot exceed $6,900

To contribute the maximum, you would have to contribute your eligible catch-up of  $166.67 to your HSA, your wife would have to contribute her full $1,000 catch-up to her HSA, and you would have to contribute between $0 and $1,150 of the regular family contribution to your HSA and your wife would have to contribute the remainder of the $6,900 regular family contribution to her HSA.  The total of the contributions to your HSA and her HSA will be $166.67 + $1,000 + $6,900 = $8066.67.

Your employer should allow your contributions to be split to the payroll deductions between your HSA and your wife's HSA as needed to maximize the HSA contributions.  If you instead contribute directly to the HSAs, the amount of the contributions made directly will not be excluded from the amount on which your Social Security and Medicare taxes are determined.

[shani53]

Where did the $166.67 come from?  Is there anything significant about $1,150 or than this figure plus $166.67 adds up to $1,316.67. If my employer deducts $8,066.67 from my pay, it needs to go into separate HSAs; one for me and one for my wife.  Is that correct?    If my employer will not open up a second HSA, then I would have to open up a separate HSA for my wife and contribute directly.   Is that correct?   If so, does that means that I would receive the benefit of reduced federal income tax but not SSA and Medicare tax.   Do I need to make all of my contributions by February 28?

[dmertz]

Your maximum regular contribution to your HSA account is $6,900 * 2 / 12 = $1,150
Your maximum catch-up to your HSA account for 2 months of HSA eligibility is $1,000 * 2 / 12 = $166.67
Your wife's maximum regular contribution to her HSA account is $6,900 minus whatever amount of regular contribution you contribute to your HSA.
Your wife's maximum catch-up contribution to her HSA account is $1,000.

Yes, if your HSA contributions are made through your employer, your employer must split the contributions between your HSA account and your wife's HSA account as indicated above so as not to exceed any of the individual or combined maximums.  You'll likely need to instruct your employer how to make the split (the dollar amount to each HSA).  Any amounts contributed through your employer under a cafeteria health insurance plan are excluded from the amounts reported in boxes 1, 3 and 5 of your W-2.  Contributions made through payroll deductions would be made from your 2017 compensation.  If your employer makes additional contributions, they can be made in either 2017 or 2018 and applied as 2017 HSA contributions if so designated by your employer.  The Forms 5498-SA for you HSA and your wife's HSA would separately show the total amount contributed *for* 2017 as well as the total amount contributed *in* 2017.

If you make eligible HSA contributions directly, separately from any made through your employer, these would not reduce any amounts on your W-2 and would instead be deducted on Form 1040 line 25, as calculated on the Forms 8889.