HSA limits question

[FireAnt]

I love HSA's and utilize it to the max, including investing my balance when I can. We have some insurance changes that will lead  DH and I to have separate insurances from now until April (me through employer, him through ACA)-- both HSA eligible. We'll then be on the same insurance from May until possible the end of the year, or we'll have separate insurances again once I pick up another travel contract.

My question is how do the limits work with us being individual/family/individual again with HSA contributions? Can we start to contribute to DH HSA at first, not surpassing $3,600, then kick it up to $7,200 once we're on the same plan to keep it simple without splitting contributions between plans? Thoughts?

[secondcor521]

I would suggest reading through the instructions for Form 8889 here:  https://www.irs.gov/pub/irs-pdf/i8889.pdf.  That link currently points to the 2021 instructions, but the 2022 instructions should be essentially the same.  Pay particular attention to the discussion of self-only coverage vs. family coverage, the last month rule, and the instructions for the amount to enter on line 3.

Generally:

You can contribute to your HSA any amounts at any time during the calendar year and up through the filing deadline next year.  So if you know you're going to qualify for $X, you can contribute that amount today.  You don't have to wait.  However, if your plans change and you contribute too much, you'll of course have to deal with withdrawing the excess contribution amount.

The maximum amounts are a bit higher for 2022:  $7,300 family and half that for individual.

If you're married and have family coverage, my understanding is that you can divide the $7,300 between your HSA and your husband's HSA any way you want.

The annual contribution amount is sometimes calculated on a monthly basis.  See Line 3 instructions above.

The rules on how the limits work between individual and family coverage, especially in a situation like yours where the coverage is changing back and forth, can be tricky to apply, so I am hesitant to give a direct answer.  I'd refer you to the instructions link above and suggest reading through it carefully.

There is something called the last month rule, discussed in the instructions.  If you have family coverage on 12/1/2022, then you can contribute the maximum amount, even if you didn't have family coverage earlier in 2022, as long as you maintain coverage throughout all of 2023.  It's a weird rule, but its part of the HSA rule set.

[terran]

With 4 months of dual individual coverage and then 8 months of family coverage I would say you can each contribute $3650 x 4/12 = $1,216.67 to your individual HSAs and together you can contribute $7300 x 8/12 = $4,866.66 to any combination of your HSAs for a total of $7300. If either of your is over 55 then that person can contribute an extra $1000 to their own HSA. 

[FireAnt]

With 4 months of dual individual coverage and then 8 months of family coverage I would say you can each contribute $3650 x 4/12 = $1,216.67 to your individual HSAs and together you can contribute $7300 x 8/12 = $4,866.66 to any combination of your HSAs for a total of $7300. If either of your is over 55 then that person can contribute an extra $1000 to their own HSA.

My hope was to just contribute to only DH account. 1. because it will be with Fidelity and 2. We will do the majority of contributing when it's dual because our monthly premium is a lot less vs individual HSA's.

[secondcor521]

With 4 months of dual individual coverage and then 8 months of family coverage I would say you can each contribute $3650 x 4/12 = $1,216.67 to your individual HSAs and together you can contribute $7300 x 8/12 = $4,866.66 to any combination of your HSAs for a total of $7300. If either of your is over 55 then that person can contribute an extra $1000 to their own HSA.

My hope was to just contribute to only DH account. 1. because it will be with Fidelity and 2. We will do the majority of contributing when it's dual because our monthly premium is a lot less vs individual HSA's.

You can divide up the contribution amount any way you like, including 100/0 DH/you.  See instructions for Line 6, Form 8889.  I provided the link in my earlier reply.

(If either of you were 55 or older, the catchup portion of the contribution would have to go to the HSA of the applicable individual(s).  But it sounds like that is not the case with you two.)

[FireAnt]

With 4 months of dual individual coverage and then 8 months of family coverage I would say you can each contribute $3650 x 4/12 = $1,216.67 to your individual HSAs and together you can contribute $7300 x 8/12 = $4,866.66 to any combination of your HSAs for a total of $7300. If either of your is over 55 then that person can contribute an extra $1000 to their own HSA.

My hope was to just contribute to only DH account. 1. because it will be with Fidelity and 2. We will do the majority of contributing when it's dual because our monthly premium is a lot less vs individual HSA's.

You can divide up the contribution amount any way you like, including 100/0 DH/you.  See instructions for Line 6, Form 8889.  I provided the link in my earlier reply.

(If either of you were 55 or older, the catchup portion of the contribution would have to go to the HSA of the applicable individual(s).  But it sounds like that is not the case with you two.)

Thanks. I plan to read your comment and link more thoroughly! I really appreciate all the time you put into it.