Can my wife contribute to her own HSA account if she is laid off?

[kim_hung_lo]

My wife has been laid off. So, she will be unemployed next year though she will still be receiving the severance pay. I will enroll her in the high deductible insurance plan offered from my employer next year. My question is whether she can make contributions to her own HSA account which was established previously when she was employed.  

[Opus 17]

If your wife is covered by a qualified HDHP, she can make contributions.  She does not have to be the "owner" of the policy.

Assuming you are both covered by a family HDHP, you share the $8550 family limit.  You can each contribute up to that amount (including any employer contributions) and you can split the family limit any way you like, but your combined contributions can't exceed the overall family limit of $8550 (for 2025).  Also note, if you can make contributions via payroll deduction, that will save more in taxes, because in addition to be excluded from state and federal income, your workplace contributions are excluded from social security and medicare tax.  So employer contributions save 7.65% more in tax than after-tax deductible contributions. 

If one or both of you is age 55 or older, that person has an additional $1000 catch up contribution limit.  The catch-up contribution must be made to the person's own account only, it can't be split or put in the other person's account. 

[kim_hung_lo]

Thanks for the answer.

Next year, both my wife and are are covered in the high deductible health insurance plan (from my work). So, we can make contribution up to $8550 to my account or split it into two amounts (totaling to $8550) and put them separately into my own HSA account and her own HSA account. Am I understanding this correctly?

Now, it comes to the catch up contribution. Both of us are above 55. So, I can contribute up to $9550 in my HSA due to my $1000 catch up. But her catch up contribution cannot be put in my own account.  Instead, the $1000 catch up for her will need to be put in her own HSA account. Am I correct about this? 

[Mike9241]

as to the catch-up, you are correct. that extra $1k must go into the account for the spouse(s) that are over 55.

[Opus 17]

@kim_hung_lo 

For 2025, you are correct.  $1000 catch-up must go into her account, $1000 into yours and the $8550 can be split any way you like.  

I also want to double-check about 2024.  What insurance do you have now?  If it is a family HDHP, then the same rules apply.  Using the last month rule, either you or your wife can split the $8300 limit for 2024, plus $1000 each individually.  Your wife is "covered" by a family HDHP for HSA purposes if you have a family HDHP (maybe for children), even if your wife is not officially covered. 

If you only have single HDHP for 2024, then you can contribute $4150 plus $1000, and your wife can't contribute anything.

However, I also want to point out that loss of a job is a "life event" that should allow you to enroll your wife on your company plan right away, without waiting for the open enrollment period.  If you can switch your coverage from single to family on or before December 1, 2024, you can use the last month rule to contribute up to $8300 plus $1000 plus $1000, even though she will only have been covered for one month.   You can make tax deductible contributions retroactive to 2024, as late as April 15, 2025 and take the tax deduction on your return. 

[kim_hung_lo]

Thanks for the detail information. It is very helpful.

For 2024, she has been employed until November. So, she has been contributing to her own HSA and she was covered under an individual HDHP. I also have been contributing to my own HSA and was covered under a family plan (for myself and my daughter). We just split the total evenly to contribute into the two HSAs. Also, I made my catch up contribution in my HSA and she made hers in her HSA. I would think this is ok. 

Since it is so close the the end of the year, we think that we would not go through the process to enroll her into my plan. Her plan covers her until end of November.  And, she can go through COBRA to have the same plan covering her till the end of the year. Next year, she will be covered under my HDHP.

With the above arrangement, her 2024 contribution would be a little lower than the limit as she would not have the HSA contributions in November and December for this year. But can she still make the contributions in November and December using after tax money? 

[Opus 17]

@kim_hung_lo 

I'm going to ask for help, because there is one part of the spousal rule that I am not sure about.  If one spouse is covered by a family HDHP, then both spouses are treated as being covered.  But, that only applies as long as "both spouses are eligible individuals."  Eligible means you are covered under an HDHP, have no disqualifying coverage, aren't on medicare, and aren't someone's dependent.

@dmertz 

Here, I may have been mistaken above about your wife being treated as having a family HDHP if you have one.  For the month of December, she is not covered by your plan, if you proceed as described, so she is not an eligible individual.

Assuming that your wife is not covered by an HDHP on December 1, 2024, then her limit for 2024 is $3804 for regular contributions and $916 for the catch-up, for a total of $4720. That's 11/12ths of the limit, and assumes she had coverage on November 1.  Eligibility is determined on the first day of each month.)  If she was terminated before 11/1 and not covered on 11/1, then her annual limit would be 10/12th the usual amount.

She can contribute up to her limit for the year, and it doesn't matter when in the year the contribution is made, (even after the termination) as long as she doesn't go over her limit.  If she makes out of pocket contributions, they become a tax deduction on your tax return. 

If she contributes up to her limit of $3804 plus $916, then your limit is $4496 plus $1000.

If she takes COBRA, and it is a qualifying HDHP, then her limit would be $4150 plus $1000, and she can make those contributions out of pocket and take a tax deduction.  Your combined overall family limit is still $8300, and your limit would be ($8300 minus wife's contribution) plus $1000.