How much can I contribute to an HSA once I go on Medicare but my spouse isn't on Medicare?

[poncho_mike]

At the beginning of 2022, both my wife and I were covered by my HSA (family plan).  I turned 65 in July 2022, but have not enrolled in Medicare Part A or B yet.  Both my wife and I are still covered by the High Deductible plan through my employer.  My HSA contributions were stopped at the end of June.

My wife is 63, and started a full-time job with her own insurance.  She has the option of an HSA for her personal insurance, which we plan to take.

In other posts, I've read if both parties are over 55, the max contribution is $9300.  The $1000 catchup is available for both parties, but my wife would have to open her own HSA.

So between the two of us, my wife was eligible to contribute to an HSA for the entire year.  I was able to contribute for half the year.  I will have a HSA family plan that covered both of us.  How much can we contribute to my wife's HSA?

I think it is either 18 months / 24 months x $8300 =  $6225.

Or is it 18/24 x $9300 = $6975?

I got $1000 employer contribution to my HSA  in January 2022 for my HSA.  My wife will also get $500 into her HSA with her new job.  I think the employer contributions are counted in the total, but I want to verify.

[Opus 17]

All contributions count, no matter who makes them.

Each HSA account is owned by one person, there is no such thing as a joint account. Contributions are considered individually, but there is also an overall family maximum.  The $1000 catch-up provision for persons over age 55 is individual only.

You are eligible to make HSA contributions until you enroll in Medicare. Your eligibility is determined on the first day of each month.  If you enroll in Medicare at any time in the next five months, your enrollment will be retroactive to July 1. That means you are only eligible to make HSA contributions for six months (Jan-June).  Your contribution limit for 2022 is 6/12 of $7300=$3650, +6/12 of the $1000 catch-up provision=$500, for a total of $4150.  

As long as your spouse is covered by a family HDHP, her contribution limit for 2022 is $7300 plus the $1000 catch-up provision, for a total of $8300.  If she changes to a single HDHP at some point, then her contribution limit is $608 for each month she was covered by a family HDHP and $304 for each month she was covered by a single HDHP.  As long as she is covered by some kind of HDHP for all 12 months, her catch-up allowance is the full $1000.

However, you can’t exceed your overall combined family maximum.  In the simple case where both of you are covered by a family HDHP for the entire year, your overall family maximum is $7300, plus $500 for your catch-up provision, plus $1000 for your spouse’s catch-up provision.  So you could contribute $4150 and your spouse could contribute $4650, or you could contribute $500 and your spouse can contribute $8300, or some other combination, as long as the contribution to your specific account is not more than $4150, as previously calculated.  Calculating your overall family maximum if your wife changes to a single HDHP at some point becomes a little more complicated, and rather than calculating all six scenarios, you could just let us know which month she would switch over her coverage, and we could help you with that calculation.

[poncho_mike]

My wife was covered under my employer's plan from Jan 1 until  August 31, so for 2/3 of the year we were on a family plan owned by me.  On September 1, she will change to her employer's HDHP and will start her own HSA, which will only cover her.  I will drop her from my employer's  HDHP plan, so I will also transition to an individual HDHP.   I stopped my HSA contributions in June, but I neglected to consider the employer match.

[Opus 17]

Under those circumstances, your spouse ‘ personal contribution limit is $6083 plus $1000 catch up equals $7083. Your personal individual limit is $4150, as previously determined. Your overall family limit is also $6083, plus $500 for your catch-up and $1000 for your spouse‘s catch-up.

If you have more than $4150 in contributions to your individual account, you will have to contact your HSA bank to remove the excess contributions, no later than the filing deadline for your tax return on April 15, 2023, but best to do it during 2022.  If those excess contribution earned any money, those earnings also have to be returned to you and they will be considered taxable income.  

[poncho_mike]

@Opus 17  

I understand that during the first six months of the year, I was the owner of a family plan and the total contribution would be $8300/2 = $4150.

I am not clear on my wife's contribution.  She won't have a family plan, she will be the only individual covered by her HSA.    You mention the overall family contribution is $6083, I'm not sure where you got that number.

Show me where I'm going wrong:

First six months of year:  Family plan, with me as the owner.  I can contribute (7300 +1000)/2 = 4150.

My wife and I continued to be on a HDHP family plan for two months, during which no contributions were made.

I think the max we can contribute as a family is (7300 x .75)+1000+500 = 6975.  The .75 is because she will be covered by a HDHP all year, I will be covered for half the year, so effectively the total family contribution is pro-rated and comes to75%.

So if I contribute $4150, the most she can contribute is $2825.

I appreciate your help, I'm just not understanding how you got the numbers.  I think the discrepancy is that my wife will not have a family plan.

Thanks.

[Opus 17]

@poncho_mike 

Your wife is “covered” by an HDHP and is eligible to contribute to an HSA, because she is covered under your plan, even though she is not the named policyholder.  

In fact, even if you maxed out your HSA last year, your wife was eligible to contribute $1000 to her own HSA, but I didn’t mention it before because you are past the deadline so it is just a lost opportunity.   

For 2022, because wife is “covered” by a family HDHP for 8 months and will be covered by a single HDHP for 4 months, her contribution limit is as I calculated.   

[Opus 17 · Accepted solution]

@poncho_mike 

You can read the instructions for form 8889 and follow the tables and worksheets.  It can be confusing if you aren't used to doing taxes by hand.  https://www.irs.gov/forms-pubs/about-form-8889

Again remember, your spouse is eligible to contribute if she is covered, even if she is not the named policyholder.  Without a workplace sponsored HSA account, they could open a private account at any bank that offers HSA accounts, but they are allowed to contribute in their own name.

Perhaps the best way to describe it is this way:

1. Your spouse's contribution limit for 2022 is $7083.  This is determined as follows (this is the limitation table in the instructions to form 8889):

Month	Coverage type	Limitation
Jan	Family	7300
Feb	Family	7300
March	Family	7300
APr	Family	7300
May	Family	7300
June	Family	7300
July	Family	7300
Aug	Family	7300
Sept	Self	3650
Oct	Self	3650
Nov	Self	3650
Dec	Self	3650
Total		73000
Limitation (total divided by 12)		$6083

Plus $1000 over age 55 (since she was eligible to contribute for the entire year) = $7083.

2. Your limitation is $4150, which we agree on.

3. Because you started out with family coverage but your spouse changed coverage in mid-year, your spouse's limitation is figured twice.

3a. First, you figure your spouse's limitation for the months they were covered by a family HDHP.  Thats $7300 x 8 months ÷ 12 months = $4867.  

3b. Your spouse gives you $3650 of their limitation for you to use.  (Your $500 extra contribution belongs to you only).   That leaves $1216 for your spouse.

3c. Then we add back your spouse's limitation for the months they had self coverage. That's $3650 x 4 ÷ 12 = $1216. So your spouse's contribution limit is $2433.

3d. Then you add your spouse's $1000 over-55 amount, for a total of $3433.

Your total family contribution limit is $4150+$3433=$7583.

If you contributed less than your own maximum of $4150, your spouse's maximum would be recalculated as per 3b, 3c and 3d, but the result is still that your spouse's maximum individual contribution is $7083, and your combined family maximum allowable contribution including both over-55 add-ons is $7583. 

[poncho_mike]

@Opus 17 

Excellent explantion.  I thank you tremendously.

I know exactly what to do.  I have to get some of my HSA contribution back because I overshot the $4150 because I didn't pro-rate my employer's contribution.   I set up my wife's HSA contribution based on your numbers.

Again, thanks.