MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

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Topic Author
Clarice
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MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by Clarice » Wed Nov 06, 2019 7:32 pm

Wondering if the family contribution limit really matters how many accounts it spans or if the account ownership matters...

Couldn’t get the spouse to save more HSA through paycheck so thinking I’ll do it through my paycheck...

curmudgeon
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by curmudgeon » Wed Nov 06, 2019 7:38 pm

Clarice wrote:
Wed Nov 06, 2019 7:32 pm
Wondering if the family contribution limit really matters how many accounts it spans or if the account ownership matters...

Couldn’t get the spouse to save more HSA through paycheck so thinking I’ll do it through my paycheck...
Yes, you can split in any way you like as long as everyone is under an appropriate insurance. The one exception is the over age 50 "catch up" amount; that has to go in the specific spouse account if you are eligible and using that.

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Clarice
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by Clarice » Thu Nov 07, 2019 7:29 am

curmudgeon wrote:
Wed Nov 06, 2019 7:38 pm
Clarice wrote:
Wed Nov 06, 2019 7:32 pm
Wondering if the family contribution limit really matters how many accounts it spans or if the account ownership matters...

Couldn’t get the spouse to save more HSA through paycheck so thinking I’ll do it through my paycheck...
Yes, you can split in any way you like as long as everyone is under an appropriate insurance. The one exception is the over age 50 "catch up" amount; that has to go in the specific spouse account if you are eligible and using that.
Okay so HSAs are unlike all other retirement accounts in this regard. Usually it feels like they have to be individual-based. I guess this makes sense though

Spirit Rider
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by Spirit Rider » Thu Nov 07, 2019 8:39 am

@curmudgeon is not entirely correct. Yes, if one spouse has a family plan then under the rules for married people, you can split the family contribution in any mutually agreeable way. However, that does not necessarily mean you can do it by HSA salary reduction contributions.

An employer must limit HSA contributions by salary reduction to the HDHP plan coverage provided by their group insurance plan. If the spouse's have different employer's, HSA salary reduction contributions are limited to that spouse's HDHP coverage.

If the spouses work for the same employer and one spouse has a family HDHP. Under the rules for married people, the employer may but is not required to allow the two spouses to allocate the two contributions anyway they agree to.

Even if the two spouses work for the same employer and the employer has the above policy. If they each have an individual HDHP. Their respective HSA salary reduction contributions are limited to the individual contribution limit.

If one spouse can not make the full HSA contribution and the other spouse refuses to contribute their full amount. The two of you are clearly not on the same financial plan. If you have joint finances or separate finances, you offer to reimburse the HSA contributions and the spouse still refuses. You have a marriage problem.

mister37
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by mister37 » Thu Nov 07, 2019 10:10 am

+1

If one spouse can not make the full HSA contribution and the other spouse refuses to contribute their full amount. The two of you are clearly not on the same financial plan. If you have joint finances or separate finances, you offer to reimburse the HSA contributions and the spouse still refuses. You have a marriage problem.
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jhfenton
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by jhfenton » Thu Nov 07, 2019 11:04 am

Spirit Rider wrote:
Thu Nov 07, 2019 8:39 am
An employer must limit HSA contributions by salary reduction to the HDHP plan coverage provided by their group insurance plan. If the spouse's have different employer's, HSA salary reduction contributions are limited to that spouse's HDHP coverage.
Are you saying that if I have Self-Only HDHP coverage and my wife has Family (Self+Kids) HDHP coverage, that I can only contribute up to the Individual HSA limit through salary reduction?

Do you have a source for this rule?

And what would the consequence be if an employer had previously allowed a salary reduction contribution up to the full Family HSA limit for an employee with Self-only HDHP coverage who had Family HDHP coverage through his spouse?

As always, I appreciate your expertise and willingness to help.

This is no longer the case for my wife and me. I now have the Self+Kids coverage *and* the HSA, but it might have been the case in a prior year.

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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by Spirit Rider » Thu Nov 07, 2019 12:45 pm

jhfenton wrote:
Thu Nov 07, 2019 11:04 am
Spirit Rider wrote:
Thu Nov 07, 2019 8:39 am
An employer must limit HSA contributions by salary reduction to the HDHP plan coverage provided by their group insurance plan. If the spouse's have different employer's, HSA salary reduction contributions are limited to that spouse's HDHP coverage.
Are you saying that if I have Self-Only HDHP coverage and my wife has Family (Self+Kids) HDHP coverage, that I can only contribute up to the Individual HSA limit through salary reduction? Do you have a source for this rule?
Yes see IRS notice 2004-50 Q&A 81

Q-81. Are employers who contribute to an employee's HSA responsible for determining whether the employee is an eligible individual and the employee’s maximum annual contribution limit?
A-81. Employers are only responsible for determining the following with respect to an employee’s eligibility and maximum annual contribution limit on HSA contributions:
  • whether the employee is covered under an HDHP (and the deductible) or low deductible health plan or plans (including health FSAs and HRAs) sponsored by that employer; and
  • the employee's age (for catch-up contributions). The employer may rely on the
    employee's representation as to his or her date of birth.
And what would the consequence be if an employer had previously allowed a salary reduction contribution up to the full Family HSA limit for an employee with Self-only HDHP coverage who had Family HDHP coverage through his spouse?

This would be a section 125 plan error and the employer's responsibility to correct.

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Clarice
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by Clarice » Thu Nov 07, 2019 12:46 pm


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jhfenton
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by jhfenton » Thu Nov 07, 2019 1:06 pm

Spirit Rider wrote:
Thu Nov 07, 2019 12:45 pm
jhfenton wrote:
Thu Nov 07, 2019 11:04 am
Spirit Rider wrote:
Thu Nov 07, 2019 8:39 am
An employer must limit HSA contributions by salary reduction to the HDHP plan coverage provided by their group insurance plan. If the spouse's have different employer's, HSA salary reduction contributions are limited to that spouse's HDHP coverage.
Are you saying that if I have Self-Only HDHP coverage and my wife has Family (Self+Kids) HDHP coverage, that I can only contribute up to the Individual HSA limit through salary reduction? Do you have a source for this rule?
Yes see IRS notice 2004-50 Q&A 81

Q-81. Are employers who contribute to an employee's HSA responsible for determining whether the employee is an eligible individual and the employee’s maximum annual contribution limit?
A-81. Employers are only responsible for determining the following with respect to an employee’s eligibility and maximum annual contribution limit on HSA contributions:
  • whether the employee is covered under an HDHP (and the deductible) or low deductible health plan or plans (including health FSAs and HRAs) sponsored by that employer; and
  • the employee's age (for catch-up contributions). The employer may rely on the
    employee's representation as to his or her date of birth.
Thank you again.

That could be read permissively, as not requiring an employer to undertake such a verification, but also not prohibiting such an independent confirmation. The answer is actually quite inartfully worded. It could also be read to mean that an employer need make no determination as to which contribution limit applies, only that the individual is an eligible individual under an HDHP sponsored by that employer.

I'm also not sure what rule would be broken by a salary deferral contribution that was not actually an excess contribution.

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Nate79
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by Nate79 » Thu Nov 07, 2019 2:31 pm

An employer will not allow you to contribute above your plans limits. Meaning if you have a single HSA your limit thru the employer will be the single limit. Nothing stops you from opening your own HSA.

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Clarice
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by Clarice » Thu Nov 07, 2019 2:49 pm

Nate79 wrote:
Thu Nov 07, 2019 2:31 pm
An employer will not allow you to contribute above your plans limits. Meaning if you have a single HSA your limit thru the employer will be the single limit. Nothing stops you from opening your own HSA.
Thanks I didn’t realize that but I guess I’ve heard you save on FICA or something if it’s through payroll.

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jhfenton
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by jhfenton » Thu Nov 07, 2019 8:34 pm

Nate79 wrote:
Thu Nov 07, 2019 2:31 pm
An employer will not allow you to contribute above your plans limits. Meaning if you have a single HSA your limit thru the employer will be the single limit. Nothing stops you from opening your own HSA.
I suspect that is generally the case, but I know of at least one large employer who allowed an employee to payroll deduct up to the family contribution based on a spouse's having family HDHP coverage, despite the employee having self-only HDHP coverage through that employer. (The employee did have to make a special request to override the default limit.) Per Spirit Rider's reading of Notice 2004-50, Q&A 81, that may not have been appropriate. But since there was no excess contribution, there's nothing for the employee to correct.

If the situation ever comes up again the employee would do more research before repeating the request. At the moment, the employee is covering the kids on his employer's HDHP and the employee's spouse is flying solo.

Spirit Rider
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Re: MFJ - 2 HSAs - can 1 HSA receive the full family contribution?

Post by Spirit Rider » Thu Nov 07, 2019 11:31 pm

As @jhfenton has pointed out. This is not really an HSA contribution issue. This is a section 125 "cafeteria" plan operational consideration. Q&A 81 is guidance to the employer.

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