HSA contribution limits for married individuals

[ajitg83]

We are a married couple, filing jointly for the year 2017. My wife has a self-only HDHP health insurance plan through work, with no contributions from employer. I have a low-deductible, self-only health insurance plan through my university (graduate student).  My wife contributed the limit for an individual which is $3400 for 2017. We were told at a local tax seminar that her company's benefits provider conducts during tax season that we can contribute the $6750 amount for family coverage given the details of our situation. 

I am a little confused regarding this since both our insurance plans are self-only and do not cover each other, but the person there told us since we are married, the tax law allows us to do this (I couldn't find a specific reference in the tax code which confirms or denys this). Are there a set of questions in the turbotax HSA that would resolve this question? Or should I need to speak to an outside tax consultant. 

In our case, we would like to make the whole $6750 contribution this year if we can, but we don't to do it if we would incur the penalty for excess contributions.

[PaulaM]

If her HDHP health insurance covers only herself, then the maximum that may be contributed for 2017 is $3,400. In order to contribute the family contribution limit of $6,750, you would need to be covered by her HDHP insurance. If you have your own coverage, then you don't qualify for family contribution amounts.

In TurboTax under the HSA section, answer the questions from the owner of the HSA's point of view (your wife's).

IRS Pub 969

[BMcCalpin]

You are right to be suspicious. If you in fact do not have HDHP coverage (it sounds like you don't, but your benefits coordinator or the insurance representative would know for sure), then the annual limit for your wife's  HSA is $3,400 (assuming that she is under 55). Note that there are more requirements to be an HDHP policy than just have high deductibles.

The question of coverage is totally a function of what the actual HDHP insurance is (and the only two choices are "Self-only" and "Family"). Your filing status has nothing to do with this. It is entirely possible for two married people to have their own Self-only HDHP plans and their own HSAs, in which case, each of them gets a $3,400 limit (but no more than $3,400 in any one HSA). 

Your university plan being "Self-only" is not "Self-only" for purposes of an HDHP or HSA; it just covers only you, that all.

Your wife contributed $3,400 to her HSA - that's great. But unless you discover that your health policy really is an HDHP-qualified plan, that's all you can do.

To boost your contribution limit, you would have to change your wife's plan to Family coverage. This is certainly doable, although I don't know what the financial impact would be. 

NOTE: this is odd, but your wife can actually boost her limit to $6,750 if she is on a Family plan, even if you are not eligible to contribute because you have conflicting coverage. The IRS simply requires that your wife have one other person on the policy to have Family coverage, even if that person is otherwise not-HSA eligible.

Perhaps this is what they were thinking at the seminar.

And if you drop your university coverage as well as join her on the Family plan, then not only is your limit now $6,750, but YOU can also contribute to her HSA. This might make the whole process more feasible.

Last note: if you make the switch mid-year, note that if your spouse has Family HDHP coverage on December 1, 2018 (or whatever year), then she is allowed to contribute to full Family amount, even if she didn't have the Family policy all year (the annual HSA contribution limit is the aggregate of each month's limit). This is called the "last-month" rule. The catch is that she would have to stay under HDHP coverage (this one or another if she changed jobs) for the entire next year or face penalties...nothing is free...