Confusing question about high deductible health plan for spouse

[xenahagton]

I see several references to this extremely confusing question but no CLEAR answer. My wife is covered under my high deductible health plan (HDHP) from my employer, which has an employer-matched health savings account (HSA) we contribute to. In the TurboTax "Deductions & Credits" section for her, the choices are family, self only, and none. Can someone clarify the actual correct answer?

[SharonD007]

Since your wife was covered under your family plan, your answer to the question What type of High Deductible Health Plan did [spouse] have on December 1, 2023? Should be None. The question is referring to the HDHP that your wife may have had in her name. 

If you need to correct, return to the section, and answer the questions again. Follow the instructions below:

1. Launch TurboTax and open or continue your return
2. Enter hsa in the search box
3. Select the Jump to link in the search results
4. Edit your answers in the HSA interview and make sure that you answer None for your wife.

[Opus 17]

I can't speak to how Turbotax wants you to answer this question, I know there is a lot of confusion.

Under the law, what counts is that your spouse is covered by an HDHP, even if the policy is not in her name.  HSA'S are like bank accounts except they are owned by one individual, there are no joint accounts.  Even though "we" contribute, it is only "your" account.  Your wife could open an HSA in her own name if she wanted to, there are many banks that offer this, it does not have to be through an employer.  And she can make tax-deductible contributions in her own name, as long as she is covered by an HDHP and has no "other" medical coverage.  Because you are covered by a family HDHP, your maximum contribution for 2023 is $7750 and for 2024 is $8300.  You can split that any way you like.  If one or both of you is age 55 or older, you get an additional  $1000 catchup contribution, but that only be contributed to each individual account. 

[xenahagton]

Thank you both so much! This answers my question, and I hope that anyone else who is wondering about it sees your posts. To summarize, my employer-provided high deductible health plan, which covers me and my wife and includes an HSA option, is a "family" plan for me, and on the page in TurboTax that asks about my wife I should select "none."

I really appreciate the help!

[jandob]

Because she is covered under your health plan, it is considered a family account. There are times when employers will have a premium for self, self plus one, or for family. Since it appears you don't have that choice, go with your family. 

[jandob]

Love your response. 

However, the high deductible health plan is different than the HSA.  Both are used to help with costs of healthcare. She is a member of the HDHP.  

For the HSA, she may need to have her own.  Personally, I have not heard of the HSA being a solo account. But if Opus 17 says you can open one in the bank, then that is way to go.  Both would then be tax deductible. 

[Opus 17]

@jandob 

HSAs are like IRAs, they are owned by individuals only.  Because an HSA can be used to pay for medical expenses for the account holder, their spouse, and their dependents, there is no particular requirement for each spouse to have their own.  However, it might be something that people want to do to diversify their holdings, or to make sure that assets are spread out equally between the spouses.  For example, if Bob has an employer sponsored HSA, and contributes $100 per week via payroll deduction ($5200 per year), then either Bob or Betty could make an extra contribution of $2550 to bring them up to the 2023 maximum.

It may be the case that an employer sponsored HSA will have lower monthly maintenance fees than a private HSA, so that should be considered.  It is also possible that a private HSA might have more investment options than the employer HSA; for example, if the employer HSA only offers a money market fund but a private HSA allows investment in mutual funds, you might want to take advantage of the higher investment potential of the mutual fund by putting some money into the spouse's HSA.

Lastly, if one or both spouses are over age 55, it is necessary for both spouses to have their own HSA if they want to maximize their contributions.  At age 55 or over, each spouse is entitled to a $1000 catchup providing, increasing the family limit for 2023 to $9750.  But the catch-up contribution can only be made to the account of the individual.  So if Bob and Betty are both 55, Bob could contribute $8750 (the family maximum of $7750 plus his $1000 catch-up), but Betty's $1000 catch-up can only be contributed to Betty's account.