HSA Question

[cmlynch100]

I would like to continue to discuss this and have someone point out where it says the under 65 employee can't contribute the family maximum if the 65+ employee enrolls in Part A. Everything I read indicates the opposite and I think there is confusing regarding the rule. Here's just a couple of the items I find online on published FAQs:

1) Note: If your spouse is age 65 or over and has applied for or begun receiving Social Security benefits (and is entitled to or enrolled in Medicare), he or she cannot contribute to an HSA. You may contribute up to the family maximum provided your spouse is enrolled as your dependent under your HDHP coverage.

2) Question: I am married, covered by a family HDHP with an HSA. My spouse is enrolled inMedicare but also covered under the family HDHP. Can I still contribute to the HSA?

Answer: Yes, being eligible to contribute to the HSA is determined by the status of the HSA accountholder not the dependents of the account holder. Your spouse being on Medicare does not disqualify you from continuing contributions to the HSA up to the family limit, even if they are also covered by the HDHP.

 

[cmlynch100]

Also, as far as I know you cannot ask for a specific start date on Part A. That back dates the lesser of six months or back to your month you turned 65, from the date you submit your Part A application. We typically advise clients to start that process 3 months prior to turning 65 so we have them stop the HSA contribution nine months before the desired transition to Medicare.

 

[LostDollar]

I would like to continue to discuss this and have someone point out where it says the under 65 employee can't contribute the family maximum if the 65+ employee enrolls in Part A. Everything I read indicates the opposite and I think there is confusing regarding the rule. Here's just a couple of the items I find online on published FAQs:

1) Note: If your spouse is age 65 or over and has applied for or begun receiving Social Security benefits (and is entitled to or enrolled in Medicare), he or she cannot contribute to an HSA. You may contribute up to the family maximum provided your spouse is enrolled as your dependent under your HDHP coverage.

2) Question: I am married, covered by a family HDHP with an HSA. My spouse is enrolled inMedicare but also covered under the family HDHP. Can I still contribute to the HSA?

Answer: Yes, being eligible to contribute to the HSA is determined by the status of the HSA accountholder not the dependents of the account holder. Your spouse being on Medicare does not disqualify you from continuing contributions to the HSA up to the family limit, even if they are also covered by the HDHP.

I am not an insurance agent or a tax professional.

In my personal opinion the answer given above to 2 is flat wrong. If you give someone that advice you had better be sure your E&O is up to date and covers giving income tax advice.

There are no joint HSA accounts. HSA accounts are individual. You can't make an HSA contribution for someone on Medicare, even if the rules allow you to put that contribution in your own HSA.

(Bolding is mine.)

Qualifying for an HSA Contribution
To be an eligible individual and qualify for an HSA contri-
bution, you must meet the following requirements.
• You are covered under a high deductible health plan
(HDHP), described later, on the first day of the month.
• You have no other health coverage except what is per-
mitted under Other health coverage, later.
• You aren't enrolled in Medicare.
• You can't be claimed as a dependent on someone
else's 2024 tax return.

https://www.irs.gov/pub/irs-pdf/p969.pdf

 

[cmlynch100]

There is a paragraph in that IRS publication at the bottom of page 4 that clearly states the family contribution limit can be met even if the covered dependent is not an eligible HSA individual:

"Self-only HDHP coverage is HDHP coverage for only an eligible individual. Family HDHP coverage is HDHP coverage for an eligible individual and at least one other individual (whether or not that individual is an eligible individual)."

That appears to be clear cut.

 

[cmlynch100]

I agree that you can't put contributions in an HSA owned by the 65+ Part A enrollee, but that was not the original question. The question is if the family limit can be contributed.

 

[somarco]

"Self-only HDHP coverage is HDHP coverage for only an eligible individual. Family HDHP coverage is HDHP coverage for an eligible individual and at least one other individual (whether or not that individual is an eligible individual)."

That appears to be clear cut.

HSA contribution limits 2024 and 2025 | Fidelity

Find out the max you can contribute to your health savings account (HSA) this year and other important HSA account rules.

www.fidelity.com

 

[somarco]

I agree that you can't put contributions in an HSA owned by the 65+ Part A enrollee, but that was not the original question. The question is if the family limit can be contributed.

Where will the family contribution go if one of the covered participants is enrolled in Medicare?

 

[somarco]

the HSA was in the name of the under 65 employee,

HSA is a bank account. Separate accounts are required. There is no such thing as a joint HSA.

 

[cmlynch100]

The family contribution will go into the under 65 employee's HSA account. As long as the HSA is in the name of the eligible employee, the contributions can be made.

From the IRS publication: "Family HDHP coverage is HDHP coverage for an eligible individual and at least one other individual (whether or not that individual is an eligible individual)"

The under 65 employee is the eligible individual. That employee has one other individual (the spouse on Part A) on their HDHP coverage. That spouse on Part A is not eligible, but per that paragraph from IRS they don't have to be ("whether or not that individual is an eligible individual"). So since the under 65 employee is eligible and has met the definiation of Family HDHP coverage the family contribution limit can be contributed.

I don't know why that paragraph would be in the document if this wasn't the case. Why would they specifically point out that the Family HDHP coverage is met if the individual is eligible or not? They would have written it like "the other individual must also be an eligible individual".

 

[cmlynch100]

I googled and found this question that Turbo Tax answered. So the tax professionals agree with me. [EXTERNAL LINK] - Impact to HSA contributions once spouse enrolls in Medicare Part A