What amount of HSA can I contribute in the year one of us hits medicare?

[kenc295]

I am self employed, and up till August 2023, both of us were covered by an HDHP.  I am yet to contribute 2023 HSA since I have till April 15th to do so.   My wife hit medicare age in August, and I hit it this month so I was covered for all of 2023 by the HDHP, she was covered for 7 months.

I have read that I can contribute a pro rated amount. which is fine for an individual, that would be 7/12 x individual amount. But what about a family plan?  And in our case a family plan with the makeup contribution of $1000?    Do I simply take the $8750 divide this by two than multiply her portion by 7/12?  

So $4375x1.583 = $6927.

Or is it more complicated than that?

[DavidD66]

It depends.  If your spouse is age 65 or over and has applied for or begun receiving Social Security benefits (and is entitled to or enrolled in Medicare), he or she cannot contribute to an HSA.  You may contribute up to the family maximum provided your spouse is enrolled as your dependent under your HDHP coverage.  being eligible to contribute to the HSA is determined by the status of the HSA account holder not the dependents of the account holder.  Your spouse being on Medicare does not disqualify you from continuing contributions to the HSA up to the family limit,

If your HDHP coverage changed from family to single coverage when your wife enrolled in Medicare, you may still contribute to the HSA, but changing from family HDHP coverage to single will impact the amount you may contribute. You may contribute 1/12 of your family contribution (including any catch up contribution) for each month you had family HDHP coverage + 1/12 of the single contribution (including any catch up contribution) for each month you have single coverage based on your status on the first of each month.

[kenc295]

My wife turned 65 in August, she is not taking soocial security, but did start on medicare.  I started medicare this month, which means I was unde the hdhp all of last year.  She was covered under the hdhp until August 1st.

We file a joint tax return, I assume I am the HSA holder since it is held in a personal account (not joint)

If I understand what you're saying, I can contribute 7/12 of a family contribution with catchup then 5/12 of a single person contribution with catchup for 2023? 

thanks for your assistance!

[dmertz]

Consider the contribution limits being comprised of two parts, the regular part and the catch-up part.  The regular part is subject to the family limit of $7,750 split between the two of you, and individual catch-up contributions.

Regarding the regular contribution limit for having family HDHP coverage, having been HSA eligible for all of 2023 you are eligible to contribute to your HSA up to the family limit of $7,750.  Because your wife was covered by Medicare for the last 5 months of the year, your wife is eligible to contribute to her HSA up to 7/12 * $7,750 = $4,521 of the family limit.  After determining each spouse's contribution limit separately, you must ensure that the combined contributions subject to the family contribution limit do not exceed $7,750.

As for catch-up contributions, you are eligible to contribute to your HSA up to $1,000 as a catch-up contribution.  Your wife is eligible to contribute to her HSA up to 7/12 of $1,000 = $583 as a catch-up.  The catch-up contributions are independent of how you split the $7,750 regular family limit.

For example if you contribute $8,000 to your HSA ($7,000 of the total family limit + $1,000 of catch-up) , your wife can contribute a maximum of $1,333 to her HSA ($750 of the total family limit plus $583 catch-up).

[kenc295]

Thanks for the reply Dmertz.

I must say though, I am a little confused now. My wife and I share a family HSA, she does not have her own.

Do you disagree with the earlier answer that it is a family HSA up till July 30th, then a single (me) HSA from August 1st till Dec 31st?

To put real numbers to it as I thought I understood them.  

7/12 x ($7750+$1000) = $5104

5/12 x ($3850+$1000) = $2021

Total = $7125.

I have never been sure if we could've contributed $2000 as a catch up ($1000 each on top of the family contribution) so to be safe, I have always added $1000 only.

[dmertz]

There is no such thing as a "family" HSA.  HSAs are individual accounts, not joint accounts, even though the distributions can be applied to the medical expenses of spouses and dependents.

If you maximize your your wife's HSA contribution for 7 months of eligibility, the correct numbers are:

7/12 x ($7,750 + $1,000) = $5,104 to your wife's HSA

5/12 x $3,850  + $1,000 = $2,604 to your HSA

Total = $7,708

You get the full $1,000 catch-up while your wife only gets 7/12 of the $1,000 catch-up

[kenc295]

Thanks again Dmertz.