We all know that to be able to contribute to an HSA you need to have an HSA-eligible high deductible health plan (HDHP) and no other coverage. The HSA contribution limit looks quite straight-forward at first glance. There’s one limit for individual coverage, and there’s another limit for family coverage, which is about double the limit for individual coverage, give-or-take. If you are 55 or older, there’s an extra $1,000 catch-up.
So far so good if you have just one health plan throughout the entire year. It gets more complicated when you are married and the two of you are on different health plans. It gets yet more complicated when your health insurance changes mid-year. The insurance change could be due to a job change, marriage or divorce, enrolling in Medicare, birth of a child, and so on.
Example 1: Husband has HDHP covering himself. Wife has non-HDHP insurance from her own employer. Wife quits mid-year and husband adds her to his HDHP.
Example 2: Husband and wife have HDHP covering both of them (no kids). Husband enrolls in Medicare mid-year. Wife continues HDHP for just herself.
What’s the HSA contribution limit in these situations?
Before we continue, it’ll be easier if we understand some ground rules.
Limit On Contributions, Not On Spending
The limits on having two plans or mid-year changes are all about contributions, i.e. putting money into the HSA, not on spending the money already in the HSA. Once the money is in the HSA, it can be spent on any qualified medical expenses incurred by all members of the family (yourself, spouse, and dependents) regardless whose name is on the HSA or whether that person is covered by the HDHP.
No Joint HSA
Although there is a higher contribution limit for family coverage and, once contributed, the money in the HSA can be used to cover eligible medical expenses incurred by anyone in the family, the HSA is in one individual’s name only. There is no joint HSA. Each person’s eligibility to contribute to his or her HSA is determined separately.
This is probably the most important part in understanding the HSA contribution limit. Once you drill this into your head, everything else becomes easy.
No HDHP Coverage = No Contribution
Because it’s an individual account, only the person who has HDHP coverage can contribute. Suppose the dad covers himself and kids in a family HDHP and the mom has her own non-HDHP coverage. Only the dad can contribute to an HSA in his name (at the family coverage level). If the mom is over 55, she’s not able to contribute her $1,000 catch-up because she doesn’t have HDHP coverage.
Age 55 Catch-Up In Own Account
Again, because an HSA is in one individual’s name, the person who is 55 or over can contribute the catch-up only to his or her own account if he or she is eligible for a contribution to begin with. If both husband and wife are 55 or over, they must have separate accounts if they want to contribute the maximum.
Both Covered By Family HDHP = Split Contribution
If both husband and wife are covered in a family HDHP, they can split the family-level HSA contribution limit between the two of them however they want. It can be 100% into one person’s HSA, 50:50 into separate HSAs in each person’s name, or anywhere in between. It would be easier to understand if you simply split 50:50.
Family + Single = Family
If one spouse in a married couple has self-only coverage and another spouse has family coverage (with kids, for example) through a separate plan, they are both treated as having family coverage. They must share one family coverage limit as if they have only one family plan.
2 Self-Only Plans Are Not Family Coverage
On the other hand, if husband and wife each has their own self-only HDHP, they can only contribute to two separate HSAs in their own names at the individual level. They can’t contribute at the family coverage level to just one person’s HSA.
Month-By-Month Prorate
When insurance coverage changes mid-year, you break it down month-by-month. You fill out a table like this:
| Husband | Wife | |
|---|---|---|
| Jan | ||
| Feb | ||
| Mar | ||
| Apr | ||
| May | ||
| Jun | ||
| Jul | ||
| Aug | ||
| Sep | ||
| Oct | ||
| Nov | ||
| Dec | ||
| Average |
For every month and each person, you put down the contribution limit for that person according to the rules above. If a person is eligible on the 1st of the month and is not enrolled in Medicare in that month, he or she is considered to be eligible for the entire month. If a person is 55 or over at the end of the year, add $1,000 to each month he or she is eligible.
Let’s take a look at our Example 1:
Husband has HDHP covering himself. Wife has non-HDHP insurance from her own employer. Wife quits mid-year and husband adds her to his HDHP.
It looks like this if both of them are 55 or over at the end of the year:
| Husband | Wife | |
|---|---|---|
| Jan | self + 1,000 | 0 |
| Feb | self + 1,000 | 0 |
| Mar | self + 1,000 | 0 |
| Apr | self + 1,000 | 0 |
| May | self + 1,000 | 0 |
| Jun | self + 1,000 | 0 |
| Jul | self + 1,000 | 0 |
| Aug | self + 1,000 | 0 |
| Sep | 1/2 family + 1,000 | 1/2 family + 1,000 |
| Oct | 1/2 family + 1,000 | 1/2 family + 1,000 |
| Nov | 1/2 family + 1,000 | 1/2 family + 1,000 |
| Dec | 1/2 family + 1,000 | 1/2 family + 1,000 |
| Average |
Remove the “+1,000” part from either person who isn’t 55 or over at the end of the year. The “1/2 family” part can shift either way to one person. Then you take an average of the 12 months. That’s the contribution limit for the year for each person.
Example 2 is a mirror image of Example 1:
Husband and wife have HDHP covering both of them (no kids). Husband enrolls in Medicare mid-year. Wife continues HDHP for just herself.
Again, if both of them are over 55 at the end of the year, it looks like this:
| Husband | Wife | |
|---|---|---|
| Jan | 1/2 family + 1,000 | 1/2 family + 1,000 |
| Feb | 1/2 family + 1,000 | 1/2 family + 1,000 |
| Mar | 1/2 family + 1,000 | 1/2 family + 1,000 |
| Apr | 0 | self + 1,000 |
| May | 0 | self + 1,000 |
| Jun | 0 | self + 1,000 |
| Jul | 0 | self + 1,000 |
| Aug | 0 | self + 1,000 |
| Sep | 0 | self + 1,000 |
| Oct | 0 | self + 1,000 |
| Nov | 0 | self + 1,000 |
| Dec | 0 | self + 1,000 |
| Average |
Again, remove the “+1,000” part from either person who isn’t 55 or over at the end of the year. The “1/2 family” part can shift either way to one person. Then you take an average of the 12 months. That’s the contribution limit for the year for each person.
The Last Month Rule
Finally there’s a “last month rule” that says if you are eligible on December 1, you can claim to be eligible for the entire calendar year even if you weren’t eligible earlier in the year. The big catch is that you have to keep your eligibility at this level for the following twelve months (January – December the following year).
If you fulfill your promise, you are forgiven for not being eligible earlier in the year and you can contribute more than you otherwise can. If you break your promise for whatever reason, you will have to go back and remove the amount you over-contributed and pay taxes and penalty.
It’s a gamble that may not be totally under your control. Say you become eligible to contribute to an HSA late in the year. You invoke the last month rule and you contribute the full-year maximum. You intend to stay in the HSA-eligible plan the next year also, but you switch jobs (voluntarily or involuntarily) and your new employer doesn’t offer an HSA-eligible plan. Now you have to jump through hoops to calculate the excess contributions you made for the previous year and figure out how to report the income and penalty on your tax return.
For this reason I don’t recommend using the last month rule. Just contribute based on your actual month-by-month eligibility.
Reference
- IRS Publication 969
- IRS Form 8889 Instructions
- HSA Contribution Rules for Married Couples, UMB Financial
Say No To Management Fees
If you are paying an advisor a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.
Butch says
Hi, I hope you can clarify my dilemma.
Both of me and my wife work with different companies.
We are covered with HDHP ( Self+ Wife+ Child) as a family under my health plan.
Wife is 58, I am 57 years old.
Wife is not covered by any health insurance from her work since she is covered under mine.
I max out on the family HSA less employer contribution + 1K catch-up.
Can my wife open her own HSA account to any bank or HSA designated brokerage for her 1K catch-up?
Will she be contributing after-tax money from our savings or it has to go to her employer to contribute a pre-tax contribution from her paycheck?
We called her employer HR regarding the plan or what we wanted to do, but was told not applicable since my wife is not covered under her employer HDHP plan? Is this true or if not, can she still contribute the 1K catch up from after-tax money from our savings?
Thank you for your guidance.
Harry Sit says
She can open an HSA at a custodian of her choice and contribute $1,000 after-tax money. If she had family coverage in all of 2017, she can contribute before April 17, 2018 and count it as contribution for 2017 (be sure to tell the custodian the contribution is for 2017 tax year). You then take the $1,000 as a deduction on your 2017 tax return. If you already filed you can amend the tax return.
Butch says
Thank you for the very informative reply, we are glad, you guided us on this matter. Cheers.
JoAnn says
I don’t think I saw an answer any where to my question and apologize if you have already responded to something similar on another post. I had a family HDHP for 3 and 1/2 months last year (2017) – I know I get a prorated contribution for the full 3 months I had an HDHP, but do I get it for the 1/2 month since it was in effect one the 1st of that month? I do not currently have a HDHP for 2018.
Harry Sit says
You get 4 months. If a person is eligible on the 1st of the month and is not enrolled in Medicare in that month, he or she is considered to be eligible for the entire month.
JoAnn says
Thank you. That is exactly what I thought but wanted confirmation.
alex says
Hi,
What if: we both have HDP (high deductible plan) through our employers. She has HSA family, I have HSA family.
We agreed to split 50/50 through the year. 6850/2=3425.
I already contributed as of May 1st my portion to my HSA.
I`m changing jobs and jumping on her HDP insurance on May 1st.
Do I have to prorate my contributions I made through my previous employer or not?
thank you.
Brad says
I was covered by a HDHP (self + spouse) through my employer with a family HSA. I’ve already contributed the maximum amount for 2018 ($6900) *and* had the funds transferred to another HSA (trustee-to-trustee). I am resigning and will lose my HDHP coverage at the end of July and am not moving onto another employer right away. My wife works but doesn’t currently work enough hours to qualify for medical benefits at her current employer. We are both under 55.
I want to know the cleanest (and ideally cheapest) way to keep my full contribution for 2018. Here are some options I think I have. Am I missing anything and what would you do if this were your scenario? Thanks so much!
1. Seems like I can continue the same coverage through COBRA, which would cost $$$ (but COBRA payments are considered qualified medical expenses — pg. 8, Pub 969). I suppose another perk to this option is I get to keep the amounts I’ve accrued toward my deductible.
2. Find another HDHP through CO state exchange — question on this: does the plan have to be classified as a high deductible health plan, or does it qualify as long as the criteria is met on pg. 3 of Pub 969?
3. May qualify for Medicaid coverage; but does having Medicaid mean you aren’t eligible to contribute to HSA for that month?
4. Be considered eligible on first day of last month (Dec 1) according to Last Month Rule (which is so stupid IMO because it’s not like I have a crystal ball). Wife plans to ramp up hours and if she has access to HDHP through employer and elects self + spouse coverage, that would still mean that I was eligible to contribute to family HSA all year, correct?
Harry Sit says
1) Yes continuing the HDHP with COBRA will maintain your eligibility for the HSA.
2) Plans eligible for the HSA usually say so. If it’s not clear, ask the exchange. You can’t just go by the deductible and out-of-pocket maximum numbers because Not All High Deductible Plans Are HSA Eligible.
3) Medicaid doesn’t have the high deductible necessary to keep you eligible for the HSA.
4) Correct. If she’s able to choose family coverage on December 1 you will be considered to be eligible for the entire year. Keep in mind you have to keep the eligibility for the following 12 months through any combination of her work, your work, exchange policy, etc.
Jay says
I currently have a HDHP family plan with my employer and i have already met the deductible which is $3000, so moving forward i am only responsible for paying 20% instead of 100% that i was responsible before i met the deductible. Now my spouse got a job and i am moving our Insurance to her HDHP plan. I know i can only make remaining contributions to the the HSA plan as i have already paid almost half for the year, but my question is, do i need to now pay the 100% of medical cost until i reach the deductible with the new plan. On the new HSA plan under my wife, we as family has deductible of $3000 and i have not incurred any expenses yet. I already paid $3000 and met my deductible under my previous plan but with this new plan do i still need to meet the $3000 deductible and start over
Harry Sit says
When you move to a different employer’s plan, you will start over on the annual deductible, which is not prorated even when you join mid-year. This is true whether the new plan is HDHP or not. The new plan simply doesn’t care what you did with the old plan with regard to the deductible.
Lisa K says
I have a question, and I haven’t been able to find an answer for my particular situation.
Currently enrolled in my employer’s HDHP with Family coverage, with employer funded HRA (which can be spent on anyone in family, regardless of coverage).
I have reached my individual deductible, and all the HRA money is spent.
In August, husband gets a new job, and we have the opportunity to make “life event” changes. His employer offers a HDHP and HSA.
Since I have met my deductible, I am staying on my current plan. If we drop my husband from the plan, and he uses his employer’s HDHP:
1. Can he even open an HSA? Or is he still considered “covered” by my HRA, even if the balance is $0?
2. Would he fall under the “last month” rule, or would he be limited to Aug-Dec contributions because he was covered under HRA Jan-Jul?
3. For next year, is he considered eligible to contribute to his own HSA if he is back under my HDHP?
I hope I explained it clearly enough. Thanks in advance for the input.
Harry Sit says
The possibility of using the HRA to pay his expenses makes him not eligible for HSA contributions. Whether you actually pay his expenses from the HRA or whether you still have money in the HRA doesn’t matter.
Michelle says
My husband and I both qualify for our own HSA contributions for our HDHP plans with our employers. We work for separate companies. I cover myself and our 3 children and he covers himself. We split the max family contribution limit in half between the 2 of us. We are divorcing this year and it will be final in November. I will still continue to insure myself and the children and he will insure himself. I have primary placement.
How does this affect our contributions for 2018 and then for 2019?
My understanding is that because we both have dependents to claim on taxes and we both have our own plans is that we each can take the full family amount for the year and we no longer split the one amount in half. Is that correct?
Harry Sit says
The contribution limit isn’t set on who has dependents. It’s set on how many people your HDHP insurance covers. Because your insurance covers you and kids for all 12 months, you will be eligible for full family coverage contribution limit. Because his insurance only covers himself for all 12 months, he will be eligible for only the single coverage contribution limit.
Linda King says
wHAT IS THE MINIMAL AMOUNT I CAN CLAIM ON MY 2018 ? dO I HAVE TILL aPRIL OF 19 TO MEET THIS MINIMUM AMOUNT . STARTING a HSA C in Sept of 2018
Tina Smith says
I have always had traditional insurance and contributed the max to my Fsa, I cover myself and mt 21year old daughter (who isn’t on my taxes ) my husband also had traditional insurance and a Fsa. Next year his employer I’d now offering a HDHP with a HSA, if I keep the same traditional plan for me and daughter and I contribute to the FSA his employer is stating he will not be eligible for the HDHP and HSA and he will be forced to take the traditional plan at a much higher cost vs. this year but they are not going to offer a FSA, is this allowed? It would mean he is excluded from any tax benefits and if I switch to a HDHP plan with a HSA at my employer he Han then pick that option but then neither if us would be allowed to cover our daughters expenses , how can this be ? And how can my S2650 exclude amy HSA from him when the HSA plan allows more per individual ? Shouldn’t employer be forced to offer a FSA if they are forcing you to take a traditional plam?
Harry Sit says
Between the general-purpose health care FSA and the HSA, between the two of you, the IRS wants you to pick one but not both. He can choose the less expensive HDHP with HSA and you stop the FSA. Or you can continue with the FSA but he chooses only the HDHP without contributing to the HSA. He isn’t forced to take the traditional plan at a much higher cost. He can enroll in the HDHP but set the HSA contribution to zero. Employer contribution to the HSA can be withdrawn as excess contribution, which is taxed, but he’s still better off after paying the tax.
Ravi says
I have HDHP plan and set up HSA family(myself+kid) at work. Wife is on a separate HDHP/HSA(Individual) plan through her employer. Can I contribute max(6900) as I have family HSA and wife contribute individual maximum into her HSA?
Harry Sit says
No. The two of you are limited to one family coverage limit.
Brian says
I have a family HDHP with HSA for myself and my children. My wife is excluded from my plan and has her own Non-HDHP. I am planning to leave my current employment and join her plan mid year. Am I correct to believe that I can contribute X/12ths the family limit where X is the number of months I am covered by my HDHP and not by her plan? I understand that this is the case for individual plans but I recall seeing somewhere that if children who were covered by a Non-HDHP at any point during the year disqualified you from contributing at the Family level. I haven’t been able to confirm this and am optimistic that I would be able to compute the contribution limit on a monthly basis as you describe.
Harry Sit says
That’s correct. It only matters that you are covering more than yourself in the HDHP and you yourself don’t have other coverage during those months. Whether your children have other coverage concurrently or afterwards doesn’t matter.
“Family HDHP coverage is an HDHP covering an eligible individual and at least one other individual (whether or not that individual is an eligible individual).”
https://www.irs.gov/pub/irs-pdf/p969.pdf
Frank says
Here’s a bit of a complicated scenario. My wife and I are self-employed and have two children. We have a daughter that has high annual medical costs, so we have her on her own separate HDHP that is HSA eligible. She meets her deductible around March every year and all medical expenses are paid by the plan afterwards. Question #1: I have an HSA account. Can I contribute to my HSA based upon her coverage if I don’t carry a HDHP for myself?
For the rest of the family I find that plans are generally less expensive annually if they are not HSA eligible. Question #2: Can I insure my wife and son on a non-HSA eligible policy and insure myself on a separate HSA eligible HDHP (with a much higher deductible than my daughter’s policy) and then contribute at the Family level? So I’d have three policies. Two of which are individual HSA eligible HDHP’s (1 for Dad/1 for Daughter) and one of which would not be HSA eligible (Mom/Son on same policy). Hope that makes sense. Thanks in advance!
Harry Sit says
1) No. 2) No.
HSA eligibility is evaluated for each individual (the “you” below).
“To be an eligible individual and qualify for an HSA, 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 permitted under Other health coverage , later.
– You aren’t enrolled in Medicare.
– You can’t be claimed as a dependent on someone else’s 2017 tax return.”
https://www.irs.gov/pub/irs-pdf/p969.pdf
When you are eligible to contribute, your contribution limit is then determined by how many people are covered by the plan you are in. When your plan only covers one person, you can contribute only at the single coverage level.
Chris says
Hello
I read through the long comment history and did not see my particular situation:
From 2016-July 2018 I was with an Employer that offered HDHP and HSA and contributed $800 automatically after qualifying health assessment exam. I did not make any contributions from my own paychecks. I still have funds in my HSA.
On July 15 2018, I changed jobs to an employer with a low deductible plan that only offers FSA. Because I am not on an HDHP eligible plan any longer, I cannot make the maximum contribution to the existing HSA for the full year.
However, I am wondering if I can still contribute a lump sum from my bank account to the HSA for the pro-rated amount of $3450 x 7/12 months of the 2018 year that I was HSA eligible, even though now I am under a non-HDHP plan today and file that lump sum post-tax contribution as a deduction from taxable income.
My concern is if the timing of my prorated 7/12 lump sum contribution to the HSA while no longer under HDHP is allowed, and if I can indeed deduct that from my gross income when filing.
Thanks
Harry Sit says
If the $800 was contributed in 2018, you need to subtract the $800. If it was contributed in previous years, you can still contribute the pro-rated amount now, in the same year you are eligible (actually up to April 2019), using your own money. You report the contribution on Form 8889. The amount becomes an adjustment on your tax return.
Chris says
Thanks a lot Harry, very clear and helpful! Since I can contribute up to ~$2000 at the 7/12 prorated amount while I was HSA-eligible, less the $800 my employer contributed for me this year, do I report the full prorated contribution on the Form 8889 (~$2000), or just the delta that I contributed out of pocket (~$1200)? Also, do I need to have proof of HDHP coverage for Jan-July of this year?
Thank you again, this is the clearest and quickest answer I got after hours of searching Google for my situation.
Harry Sit says
Take a look at Form 8889. Your pro-rated amount (line 3), your own contribution (the delta, line 2), and the employer contribution (line 9) are all reported separately. If you use tax software, the software will ask you questions about those and use your answers to fill in those fields. You don’t need to send in proof when you file but as with everything on your tax return, you need to be prepared to defend every entry when you are asked to show proof.
Mark K says
We have a HDHP For 2019 (husband and wife). We work with two different employers. Initially we decided to have $7000 withheld from one of our pay who is under age 55. Reading your article we realize it’s better to have the spouse that is over 55 contribute $4500 to his HSA and the younger spouse contribute $3500 to hers so combined we can contribute $8000 in 2019.
We asked the younger spouse’s employer to decrease her 2019 withholding from $7000 to $3500 but her employer is saying HSA contributions can’t be reduced after the annual open enrollment which closed Nov 2nd. Is their denial based on an IRS rule? Or does the IRS allow changes to HSA withholding mid-year as long as the annual limits are not exceeded?
Harry Sit says
The IRS allows changes to HSA withholding mid-year.
https://tax.thomsonreuters.com/blog/when-can-participants-change-their-hsa-contribution-elections-under-our-cafeteria-plan/
If you have two separate HDHPs each covering just one person, you can’t contribute $7,000 to one person’s account. You have to do $3,500/$4,500. If one of your plans covers 2 or more people, you can do $7,000 for one person, and $1,000 for the person 55 or older.
Jennifer Blackburn says
In my state, the “bronze HSA” plan was eliminated leaving us to choose either a bronze non HSA plan (that still has a high deductible, just no HSA), or go with a “silver HSA” plan that costs about $6000 more annually which wipes out the tax deduction for the HSA. Reading this, it sound like possibly I could opt for the HD plan just for 2 of my kids (since that would be cheapest), contribute the maximum and use those funds for any member of my family. Is that correct?
Harry Sit says
No. The person who contributes has to be covered by an HSA-eligible plan.
LYNN says
My spouse has an HDHP and an HSA through her employer and contributes at the individual level. I have a non HDHP through my employer. We are enrolling our 6yo in a child only, individual HDHP. Can my spouse open a second HSA account at the individual level to be used for my son?
Harry Sit says
No, because her plan only covers one person. A child can’t contribute to an HSA. If she adds the child to her plan, instead of a separate child-only plan, she would then be able to contribute at the family coverage level.
Bob says
My wife’s company is switching the family HSA to a new custodian for 2019. It appears there will be some type of rollover for the balance held by the old custodian into the new account. We had not been paying attention to the potential benefits and have only contributed about 3000$ to the old custodian account for 2018. We have until April 2019 to contribute the remaining 4900$ (including catch-up) left for the 2018 limit, but do you think the new custodian will be able to accept this? It seems they should since it is simply an HSA and we are eligible to contribute for 2018 until April, but perhaps they might say, “The account opened Jan. 1, 2019, so we can’t accept contributions for 2018.”
Harry Sit says
Just ask them. It’s normal to open an HSA in the following year and contribute for the previous year before April 15. They usually have a paper form for you to mark whether the contribution is for the current year or for the prior year. If your new custodian can’t do it, there are plenty of others who will. See Best HSA Provider for Investing HSA Money. You are not limited to having only one HSA. Only the total contributions for one year to all your HSAs must not exceed the limit.
Jan Larsen says
Does the same monthly calculation of the limit apply if for some reason the employee has HDHC coverage on January 1st, then loses coverage (so they have no coverage at all) on June 1st, and then gets HDHC coverage again on October 1st for the rest of the year? (ignoring the full year rule) So in this case if they had employee only coverage when they were covered, they would have 6 + 3 months or 9/12 of the employee only limit (plus 9/12 of the catchup if applicable)?
Harry Sit says
January through May is 5 months, not 6. So 8/12th.
Paul S says
Hello – My wife and I were covered under a Family (Husband/Wife) HDHP provided by my employer for the first four months of this year. Both my wife and I are over 55. Our HSA contribution election for 2019 was $8,000 ($7,000 family limit + $1,000 catch-up) . We have always assumed that the catch-up provision was for me alone, as the primary insured, hence the $1,000 the allocation.
Note: My wife has always been covered under my employer health plan, even though she has access to coverage under her employer. As a result, we have a single HSA.
At the end of April, I left my current employer and joined a new firm. As a result, my wife and I have decided to unbundled our medical insurance coverage – beginning on June 1st I will be enrolled in an Individual HDHP with my new employer and my wife will enroll in an Individual HDHP with her current employer.
We are simply trying to figure out how much we can contribute to our new individual HSA’s for the remainder of the 2019. Our assumptions are as follows (round numbers for ease of presentation):
– 2019 Limits: We each have $4,500 in an annual contribution limit for 2019 – $3,500 standard limit + $1,000 catch-up.
– HSA Contributions To Date: $2,667 was contributed to our existing HSA through the first four months of the year. Our assumption is that $2,333 was attributed to $7,000 Family limit and $334 attributed to my $1,000 Catch-Up Limit.
Given that, we assume the following allocation of Individual HSA contributions:
-My Contributions To Date: $1,500. 50% of Family Limit contributed to date and 100% of Catch-Up contributed to date. Leaving $3,000 eligible to be contributed to my new HSA for the remainder of 2019.
– My Wife’s Contributions To Date: $1,167. 50% of Family Limited contributed to date and 0% of Catch-Up. Leaving $3,334 eligible to be contributed to her new HSA for the remainder of 2019.
Are our assumptions correct? Thank you in advance for your response and guidance!
Harry Sit says
You didn’t say what’s happening in May. If neither of you has HDHP coverage in May, your contribution limit is 0 for that one month. If you have the same coverage as January to April, and just no actual HSA contributions are deducted by payroll, you still have the eligibility. Between January and April, you decided to shift your wife’s 1/2 family contribution limit to you. So you will fill out that table this way:
Jan – Apr = You: family + 1,000 | Wife: 1,000
May = You: ? | Wife: ?
Jun – Dec = You: single + 1,000 | Wife: single + 1,000
Add up the columns and divide by 12. That’s the total annual limit for each person. Subtract the contributions already made.
Paul S says
Hi Harry – Thanks for the feedback. May is a no coverage month…so good to know that is a bagel month for the two of us. I appreciate your guidance and help!
Jason says
Hello,
here is our situation, please advice:
Me, my wife, and one kid participate on HDHP family health insurance from January till today. I currently have hsa account and contribute to maximum family limit per month ($7000/12 = $583.33) (my wife doesn’t have hsa account).
My wife has got a new job this month (august) and plan to join non-HDHP insurance to cover herself only so she will have both HDHP coverage (through my family insurance) and non-HDHP coverage (through her employer). How does it affect my hsa contribution limit?
will she cap down my hsa contribution limit for this year so my contribution hsa limit become: ($583.33*8 + 291.67*4) = 5833.33
or since my kid is still with my family non-HDHP insurance, so my max contribution hsa limit is still $7000 for 2019?
Thank you!
Harry Sit says
You can continue to contribute at the family coverage level when your plan covers 2 or more persons – yourself and your kid – and you don’t have other coverage. Make sure your wife doesn’t enroll in the healthcare FSA at her new job.
John says
Thanks for a great article.
I read the scenarios in 2008–25 I.R.B., particularly example 3, and was hoping you could confirm the 2019 HSA limit for my situation.
My wife and I (both <55) worked at different companies with our own separate HDHP HSA-eligible plans starting Jan 2019.
We both contributed each paycheck with the goal to reach the individual maximum.
Wife lost job in May with 2019 contribution equaling $1700.
Wife added to my HDHP HSA-eligible plan and changed from individual to family.
Based on the “last month rule” (assuming no changes Dec 2019 and we fulfill the testing period into 2020), the $1700 from her HSA contribution would be included in the $7000 family plan limit? I would then be able to contribute $5300 total in my HSA account for 2019? FWIW my job has more stability and I am okay with the testing period.
Thank you.
Harry Sit says
Under the last month rule, when you have family coverage on December 1, you are considered as having family coverage for the entire year. You then split the family coverage limit between the two of you. Her $1,700 contributed earlier in the year is part of the split. You then are able to contribute $5,300. These numbers also include any employer contributions.
Julie says
Hi Harry,
Thank you for the article and being so responsive. It’s all very confusing!
I read through most but not all of the comments but did not see this scenario:
My husband and son will be on a shared HDHP from my husband’s employer all of 2020.
I plan to switch coverage from my own HDHP from my employer at the end of March during our next enrollment plan so that I will have an HRA plan instead – still my own plan from my employer. From my understanding, I then lose HSA eligibility but my husband maintains his family level eligibility.
My husband and I both have HSA accounts. How much can I put into my account to account for the three months that I am eligible? And then how much can he put into his account?
Hope that makes sense.
Thanks,
Julie
Harry Sit says
For the first three months, it’s a simple case of Single + Family = Family. Both of you are considered to have family coverage. You can divide the maximum for family coverage between the two of you however you want.
For the months after you have an HRA, ask what the HRA _can_ pay — just your own expenses or theoretically your husband’s expenses as well (whether you actually submit your husband’s expenses for reimbursement or not). If the HRA can pay your husband’s expenses, even if you don’t submit any of his expenses for reimbursement, his eligibility for HSA contribution will stop as well. If the HRA can only pay your own expenses, then he will continue his eligibility with family coverage for the remaining months.
Liz says
Hi Harry, I really appreciate for such a great article!
I have PPO for the first 9 months in 2019 and switching to a single HDHP for the last 3 months. I took advantage of the last month rule and contributed the maximum $3500 in 2019. My husband has single HDHP for the entire year 2019 and is also contributing max $3500. Starting 1/1/2020, I will be withdrawing from my current HDHP and join my husband’s HDHP which will then be converted into a family plan. In this case, I will still be covered under a HDHP but however will not be contributing to HSA under my name, my husband will be the one contributing the maximum 2020 contribution under his own account. In this situation, am I still an eligible individual since I am not the main account holder of the HDHP and HSA? Will I pass the testing period in 2020 if I will be under my husband’s HDHP for next year instead of my own?
Thank you so much for taking time to respond.
Best,
Liz
Harry Sit says
To be an eligible individual you are only required to be _covered_ under an HSA-eligible high deductible plan with no other coverage. That plan doesn’t have to be under your own name. You also don’t have to contribute to an HSA yourself.
luna jha says
I and my husband are on separate plans. My husband has our kid on his insurance and contributes $6000 by the year end
I had set my HSA account and contributed $1000 towards my HSA. Is it acceptable?
Thomas Lin says
I had an HSA for the family HDHP from Jan to Nov 2019. Since Dec 2019, I have had Medicare while my wife has had her self HDHP. So, she also has an HSA. Not sure whether my question below would relate to the so-called Last Month Rule, so please note that she will have her Medicare in March 2020.
I contributed $7,333 to my HSA based on the calculation ($7,000 + $1,000) x (11/12). Our question is how much my wife can contribute to her HSA. My understanding of your example 2 made me say she could contribute $1,292 [ = ($0 + $1,000) x 11 + ($3,500 + $1,000) x 1 ]/12. Is this correct? If not, please advise the correct amount. Thank you.
Harry Sit says
That’s correct.
Thomas Lin says
Thank you very much for the prompt confirmation. If possible, please allow me to ask further – since totally I and my wife will be contributing $8,625, short of the $9,000 max limit, which is the sum of $7,000 for family and $1,000 catch-up apiece for each spouse. Does it mean actually she could put an extra $375 into her HSA on top of the $1,292?
Harry Sit says
No, because the two of you didn’t have family coverage for the full year.
ISU-Cyclones says
Thank you for the thorough work and examples. On 1 Jan 2020, my wife and I worked for the same company. We each had our own individual insurance coverage with the company that qualified as a HDHP plan and thus we each have our own individual HSAs. For prev years, it was very clean that we each contributed to our own HSAs up to the individual amount. In mid-March 2020, my wife quit her job and joined my insurance coverage. I still work for the same company and my wife is not working. We are both early 50’s in age so catch-up is not a factor. Prior to my wife quitting, she had contributed $625 in 2020 to her individual HSA via pre-tax payroll deductions. If the family maximum contribution for 2020 is $7100, then should I increase my pre-tax payroll deductions to reach $6475 ($7100 – $625) by the end of 2020? This way, the sum of our 2 total contributions for 2020 equals $7100 (hers at $625 + mine at $6475). As an alternate, I have read that certain mid-year changes can actually allow a family’s total contributions to EXCEED the $7100 for that calendar year in which the change occurred. In this case, I could increase my pre-tax payroll deductions to reach $7100 by the end of 2020 just in my HSA. Add in the $625 that my wife contributed while still on her individual plan in Jan-Mar and our family’s total for 2020 would be $7725. Of course, this only applies in 2020. Please advise….thank you.
Harry Sit says
Each of you has individual coverage for 3 months. Together, you have family coverage for 9 months. When she gives her 1/2 family coverage limit to you, that table shows her limit is $3,550 * 3/12 = $887.50 and your limit is $3,550 * 3/12 + $7,100 * 9/12 = $6,212.50. Although the two of you together have a total limit of $887.50 + 6,212.50 = $7,100, she can’t give her individual limit to you. So you can only go up to $6,212.50. She can still contribute a little more ($887.50 – $625), but only to her account.
Carl says
Hi. My wife has had no medical insurance, so I have been putting her on my company HDHP plan over the years and contributing the maximum employee plus one amount to HSA. She has decided to leave me in no-fault divorce. The final divorce decree likely will not be signed by the judge until approximately March 2021. I will continue covering her until then. But it sounds like from all the discussions above that perhaps I should only contribute the maximum amount to HSA for me only beginning in 2021, since she may get a HDHP plan on her own sometime during 2021 and contribute to a HSA. What do you think? If I contributed more than for just me I would likely get in a penalty mess, right? Thanks for any input you might have.
Harry Sit says
You will be eligible for 3 months of family coverage plus 9 months of single coverage if you will keep her on your insurance for three months before you drop down to only yourself. If you’d like to keep it simple and just contribute at the single coverage level for the full year, that’s perfectly fine.
Sana says
Even though I have an HSA through my ex-employer via COBRA, I would like open a personal Fidelity HSA due to more investing options.
Question: Can I contribute directly to Fidelity HSA and not contribute at all to employer-HSA? I will make sure that the total contribution for the year does not exceed the maximum allowed.
Harry Sit says
You can choose which HSA to contribute to when you have more than one HSA. If your ex-employer is auto drafting your bank account, contact them to stop the HSA part.
Sana says
Thank you so much, Harry!
What a wonderful website you have. Recommending it to everyone!
Pam says
My husband and I each have a family HDHP plan through our employer and contribute the max available each year. His 65th birthday is on December 19th, 2022, and he will be retiring Jan 1, 2023. I will be retiring at the same time but I will not be 65 yet. How does his December social security eligibility affect what our contribution would be for 2022? His work insurance would cover him through the end of December.
Angela says
I have an employee who has EE Only coverage with a HDHP, with an HSA. She is over 65, having previously waived all of Medicare (including Part A). She plans to enroll in Medicare with this upcoming enrollment, effective 1/1/2023. We are trying to figure out how she might be affected by the 6 month rule. She made her last HSA contribution on 10/21/22, with a total 2022 contribution (employer and employee contribution total) of $2075. Is the 6 month rule based on her last contribution date or is she safe with her $2075 total contribution because that would be less than her 6 month (Jan-June) prorated max of $2325 (50% of the 2022 max of $3650 plus $1000 catch up). Does she need to back out the contributions she made from July-October or is she safe because it’s less than her pro-rated max amount for the first 6 months of 2022? Thank you!
Harry Sit says
The contribution dates within a calendar year don’t matter. If she’s eligible in six months, her maximum is 6/12 of the annual maximum.
Sunny says
I am enrolled in a HDHP for self and my spouse (no other dependents) through my employer. My spouse also has individual self coverage in an HMO Plan through her employer. As per the COB, her HMO Plan is her Primary plan. I am not covered under her plan. We don’t have any health FSA or HRA.
Can I contribute to the family maximum to my HSA ?
Sean Paul says
Yes…I have done this in the past. I had to pay a surcharge, but the value of the increased employer contribution and higher contribution limit more than offset it. Just be aware that it is still your HSA, and the entire family contribution has to go to your HSA (although you can get reimbursed for spouse’s expenses that are not otherwise reimbursed by another source).
Sunny says
Thanks for the reply Sean. I wrote to my benefits team and got the response that I can contribute up to the family maximum but it is against the IRS regulation that my spouse has other first dollar coverage under the HMO. I searched regarding this in the IRS Publication 969 (https://www.irs.gov/publications/p969) but didn’t find anything a regulation regarding our situation.
Harry Sit says
It’s the other way around — she can’t contribute to her HSA when she has first-dollar coverage under the HMO. It’s not against any regulation to have first-dollar coverage when she’s not contributing to an HSA. You can still contribute to an HSA in your name at the family coverage level and you can still use the HSA dollars to cover her deductible and copays.
Sunny says
Thanks for the reply, Harry!
David Daniels says
I am using H&R Block 2024 Deluxe software and having trouble understanding how it is handling HSA excess contributions. The facts:
1. My wife and I got married on 12/12/2024
2. We both work for the same company and had family coverage HSA’s as we both had children from prior marriages
3. I contributed $8300 to my HSA account and my wife contributed $2300 to her account. We are now filing a joint return 2024 tax return. I understand that the joint/family limit is $8300
4. During the year, I withdrew $5,215 from my HSA account and my wife withdrew $2,342 from her account
5. I instructed the Block software to split the $8300 allowance 100% to me and 0% to my wife.
6. This results in a $2300 excess contribution for my wife.
7. In the software, there is a question that asks how much of the excess contribution ($2300) will be withdrawn by the filing date. It’s my understanding that the withdrawal of the $2300 will eliminate the penalty but the $2300 will still have to be included as “other income” on the 1040 (even if the excess is withdrawn). When I enter 0 as the amount withdrawn by the filing date, the program adds the $2300 on the 1040 as other income. However, if I enter $2300 as the amount withdrawn by the filing date, the program DOES NOT add the $2300 onto the 1040 as other income and the refund amount is increased (by over $500).
8. I’m confused as to why the program does not add the $2300 as other income on the 1040 when I tell the program the $2300 will be withdrawn by filing date. The $2300 contribution was pretax (as indicated by code W on her W-2). Does it have anything to do with the fact that she withdrew more ($2342) for medical expenses than she contributed ($2300)
I am confused! Thanks for any help!