Author Topic: Unique Health Savings Account Question - How much possible to contribute?  (Read 1844 times)

Swat

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Here is a unique question regarding my Health Savings Account that I could use some opinions on.
I currently have a Health Savings Account for 2016 as an individual and will be maxing out my contribution this year. My wife is currently utilizing a different health insurance plan through her employer which does not qualify for an HSA. The reason we did this is because we were expecting to become pregnant during the year and wanted to have a more comprehensive medical plan for her delivery.

Things went according to plan and we are expecting in mid-November. Since the birth of our child will qualify as a "major life event" and allow me to make changes to my current plan, I was thinking of switching my plan from an individual to a family for the 4-6 weeks left in 2015. My hope is this would allow me to then contribute an additional $3400 ($6750-$3350) for the year. Is this possible or do I need to be on the family plan for the entirety of 2016? I'll of course need to reevaluate for 2017 but was curious about my options for 2016.

Thanks for the help.

bacchi

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If you switch to a family plan by December 1st, you can contribute the maximum family contribution. This is based on the "last-month" rule. However, the testing period is through the entirety of the next year. This means that the family plan must remain in effect through the end of 2017.

See "Limits on Contributions" here: https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204045




seattlecyclone

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Be aware that if you switch your wife's insurance coverage mid-year because of the life event, it's likely that the coverage change would be retroactive to the date of the birth. Since your main reason for having her on a different plan was to have the childbirth event be more fully covered than under your HDHP, this may not be what you want to do.

That said, the last month rule should apply here. As long as you have family coverage on December 1 and keep it through the end of next year, you should be able to make a full family-sized contribution this year.

Swat

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Great points from everyone for me to evaluate. Quick follow up question.

Let's assume I make no changes for 2016 and now we're talking about 2017 plans.
I will likely stay on my individual HDHP with an HSA as an individual and my wife switches to her own HDHP with HSA as a "parent + dependent." The reason why I wouldn't join her coverage (as the third member) is that her plan has a clause where they'd charge a very high ADDITIONAL premium for a spouse if that spouse has an opportunity to get their insurance through their own employer (which I can). Having her join my plan as a family isn't a great option either as my in-network is very far from where we live (I have a long commute as a medical resident) and it would be too difficult to have a pediatrician/hospital that far away.

Question:
For 2017, am I able to contribute to an individual HSA ($3,400) while my wife contributes as a family HSA ($6,750) since our child will be on her plan? This would total $10,150 (3,400 + 6750). Is this legal and will it work? If not, what is my best alternative to maximize my HSA contributions given my unique situation?

Of note, we currently file a married, joint tax return if that has any bearing.

Thank you.

seattlecyclone

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A married couple can't make more than one family-sized HSA contribution in a year, even if the spouses are covered under two different health plans.