HSA Maximum contribution when 2 different HSA accounts for Spouses

[jtax1]

Please confirm if my understanding of the above is correct.   

We have 2 separate HSA accounts and 1 High deductible family plan coverage.   My understanding is that we (my spouse and I, married filing jointly) can contribute:

• $8,100 since we are both 55 or older at the end of 2020 and are covered by a family HDHP. 
• Can we contribute this 8100 to either of the accounts, and/or mix it up the contribution in anyway so that it does not exceed $8100 (ie/ 8100 in one account and 0 in the other,   or 5100 in 1 account and 3000 in the other?).     (I am concerned about is contributing more than $4600 to 1 account). 
• Thank you.

[Opus 17]

For 2020, and assuming no one has some type of "other" coverage that would disqualify them, the contribution limit for family HDHP coverage is $7100, plus $1000 catch-up contribution for each spouse age 55 or over.  So your overall limit is $9100, BUT the $1000 catch-up can only be contributed to an account in that person's name.  You can divide the other $7100 any way you like.

Allowed

$8100 in spouse A's account and $1000 in spouse B's account.

$4650 in spouse A's account and $4650 in spouse B's account.

$2000 in spouse A's account and $7100 in spouse B's account.

Not allowed

$9100 in spouse A's account and nothing in spouse B's account.

[jtax1]

Thank you for the clear explanation.  Please clarify one more situation please.  I am older than my spouse and will not be able to contribute when I begin Medicare.  Please confirm what it will look like that year (the year I turn 65) and my spouse is still 63, use 2020 numbers for illustration.  My thought is that since we will no longer have a family plan that year,  I will be able to contribute 0$ and my spouse will be able to contribute $4600, is that correct?   I turn 65 on Nov 30, 2026.  It might be better for me to start Medicare 1 month later, 2027,  so I we can have a family plan all of 2026.   But I think I should probably plan on no HSA contribution in 2026, to ensure all requirements met,  including HDHP.  Thank you.    

[BillM223]

"I turn 65 on Nov 30, 2026"

The problem with this planning is that the Social Security Administration makes it difficult to know when you are actually starting on Social Security.

Medicare starts either on the first of your 65th birthday month, or on the 1st of the previous month if your birthday is on the first of the month, or if you sign up within 6 months of turning 65, the start date is set back to the 1st of your birthday month, or once you are beyond 6 months from your 65th birthday, the most backdating is 6 months.

Please see this Medicare webpage to see if that makes more sense.

But I recently heard of a user here who applied for Medicare, and the SSA dated the coverage starting on the date of application, not the date that he/she requested that the coverage start.

Having said all that, consider this:

Whether or not you have Family coverage is a function of a taxpayer (whichever one of you) having coverage that is shared with at least one other person. The "other person" does not have to be eligible to contribute to an HSA. Thus, if the HDHP plan was in your spouse's name, even though you went on Medicare, your spouse could continue Family coverage, as long as you were also listed on the policy.

In the two years in which one of you will be eligible to contribute to an HSA, you will have to evaluate the additional cost of the Family plan versus the HSA contribution benefit.

In such an environment, in the year that you turn 65, the only thing that gets really limited is the amount of the $1,000 "bonus" that you can contribute to your HSA. If you have arranged for the Family coverage to be in your spouse's name (i.e., your spouse's policy), then the Family coverage will not be limited at all in that year if your spouse is the primary recipient of HSA contributions.

But if your Medicare starts on November 1, 2026, you would get to contribute 10/12 * $1,000 to your HSA, your spouse could still contribute the full $1,000 to your spouse's HSA, and the $7,100 (or whatever it will be), will still be available to divide between you and your spouse, so long as you don't get more than 10/12s of it into your own HSA.

Just bear in mind the link I gave you above in case the SSA ever changes its policy on when it starts Medicare.

[Opus 17]

@jtax1 

2025 is far enough that there are no guarantees the Congress won’t change the law. Based on current law this is what happens:

If you and your wife are covered by a family HDHP,  then you are each allowed to contribute to an HSA in your own name, even though the insurance policy might be in the name of only one of you.  Your eligibility to contribute to an HSA is determined by your type of medical coverage one the first day of each month.  If you turn 65 on November 30, your Medicare will start November 1 as long as you sign up for Medicare three months before up to three months after your 65th birthday.  The only way to remain fully eligible for all of 2025 would be to not sign up for Medicare until April 2026, and you may be facing penalties at that point for signing up late. I’m not an expert on that, but let’s assume that you take Medicare on November 1.

If you are enrolled in a family HDHP from January to October, you will be able to contribute 10/12 of the annual maximum into your HSA. For 2021, that would be $7200 times 10/12 = $6000 plus $1000 catch-up provision x 10/12 = $833 = $6833 total.

If you and your wife remained enrolled in a family HDHP even though you were also enrolled in Medicare, your wife could contribute the full annual maximum to her account, which for 2021 would be $8200. If she switches to self-only coverage effective November 1, then her annual contribution limit would be $6833 (for the 10 months of family coverage) plus $766 for 2 months of self-only eligibility for a total of $7566.  

However, your overall maximum family limit is whatever your wife’s limit is plus $833 which represents your catch-up limit.  Your catch-up limit can only be contributed to an HSA in your name and your wife’s catch-up limit of $1000 can only be contributed to an HSA in her name, and the rest of your annual limit can be divided between your accounts any way that you like.

[jtax1]

Opus17,   You explained this very well.  One additional clarification regarding the 1 time rollover allowed from IRA to HSA.     Would this be allowed:

2021:  $8100 Rollover from spouse A IRA and $1000 spouse B contribution

2022:  $8100 Rollover from spouse B IRA and $1000 spouse A contribution

[Opus 17]

@jtax1 

Yes, with the caveat that each rollover must be from a IRA owned by the specific taxpayer into an HSA owned by the specific taxpayer, because both IRAs and HSAs are individually owned accounts.  So spouse A could rollover up to $8200 from an IRA owned by spouse A into an HSA owned by spouse A. Then spouse B could contribute the $1000 catch-up into their HSA.

This assumes that both spouses are covered by a family HDHP for the entire year and are both age 55 or older. The limit is not $7100 or $8100, but is $7200 or $8200 for 2021, and will probably be increased slightly for 2022. The IRS usually announces the next year‘s contribution limits around September.