HSA contribution strategy - married couple

[SunRainSnow]

Seeking advice from the knowledgeable folks here about HSA contribution strategy (or optimization). My spouse and I have a HDHP insurance policy from the ACA marketplace, HSA eligible. Last year we maxed out the family maximum by splitting the contribution in half between our two Fido HSA accounts. Is there any advantage to splitting the contribution another way? Some background:

We'll max out our HSA for the foreseeable future.
We don't use our HSA to pay any medical bills.
HSA is earmarked for Medicare era expenses (as of today).
Married File Jointly - M52/F47

I'm just wondering if it might be a good idea to put all the HSA contribution in the older spouse account being as they will reach Medicare age first?

Thanks in advance for any help.

SRS

[jebmke]

Qualified expenses for either spouse can be reimbursed from either account.

[FiveK]

If you want to deplete the HSA ASAP due to Medicare premiums alone and the older spouse's account is currently not sufficient to use all those premiums, then you could do what you suggest.

Otherwise, it doesn't matter. Also, the age 55+ catch-up must go into that individual's HSA.

[InvestorHowie]

Qualified expenses for either spouse can be reimbursed from either account.

Right. I've always been under the assumption that a couple who has been contributing as a 'family' where both are members of a HDHP would be able to apply any future HSA distributions to expenses incurred by either spouse however lopsided they might be? The only limitation being that the opening date of the HSA account needs to precede the date of the reimbursable health expense and its subsequent distribution.

The only thing I could see potentially muddying the water would be two spouses contributing independently as 'single' contributors and account holders.

Can anyone clear this up?

[MP123]

Qualified expenses for either spouse can be reimbursed from either account.

Right. I've always been under the assumption that a couple who has been contributing as a 'family' where both are members of a HDHP would be able to apply any future HSA distributions to expenses incurred by either spouse however lopsided they might be? The only limitation being that the opening date of the HSA account needs to precede the date of the reimbursable health expense and its subsequent distribution.

The only thing I could see potentially muddying the water would be two spouses contributing independently as 'single' contributors and account holders.

Can anyone clear this up?

One thing to remember is that health insurance premiums including Medicare are not qualified medical expenses for an HSA until the account holder reaches 65.

So, a younger spouse couldn't pay the older spouse's premiums from their HSA even though the older spouse would be eligible for pay them from their own HSA.

But, other than that, in general, expenses could be paid from either HSA no matter what type of coverage each account owner had at the time of contribution.

[Artsdoctor]

^ Nice pick-up. That seems to be an exception but good to know.

Otherwise, given the OP's current set-up, they can mix and match as they choose. The only other caveat is that the catch-up contribution at age 55 must be taken by the older account holder and not split between the two of them.

[dcabler]

Right. I've always been under the assumption that a couple who has been contributing as a 'family' where both are members of a HDHP would be able to apply any future HSA distributions to expenses incurred by either spouse however lopsided they might be? The only limitation being that the opening date of the HSA account needs to precede the date of the reimbursable health expense and its subsequent distribution.

The only thing I could see potentially muddying the water would be two spouses contributing independently as 'single' contributors and account holders.

Can anyone clear this up?

One thing to remember is that health insurance premiums including Medicare are not qualified medical expenses for an HSA until the account holder reaches 65.

So, a younger spouse couldn't pay the older spouse's premiums from their HSA even though the older spouse would be eligible for pay them from their own HSA.

But, other than that, in general, expenses could be paid from either HSA no matter what type of coverage each account owner had at the time of contribution.

COBRA health insurance premiums are qualified medical expenses for an HSA under 65 years of age.

https://www.irs.gov/publications/p969

"Insurance premiums. You can’t treat insurance premiums as qualified medical expenses unless the premiums are for any of the following.
Long-term care insurance.
Health care continuation coverage (such as coverage under COBRA).
Health care coverage while receiving unemployment compensation under federal or state law.
Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap)."

Cheers.

[InvestorHowie]

One thing to remember is that health insurance premiums including Medicare are not qualified medical expenses for an HSA until the account holder reaches 65.

So, a younger spouse couldn't pay the older spouse's premiums from their HSA even though the older spouse would be eligible for pay them from their own HSA.

But, other than that, in general, expenses could be paid from either HSA no matter what type of coverage each account owner had at the time of contribution.

Understood and appreciate the insight. Depending on the age of the HSA account(s) in question it would seem simple to reimburse past expenses to, in effect, indirectly reimburse said premiums of the elder spouse from the younger spouse's account. This particular case would seem to justify saving receipts/invoice/EOB statements for any significant medical expenses for either spouse before the elder spouse's Medicare or other premiums are realized at 65+. DW and I document anything $100 or higher and have a pretty decent bank of expenses to draw from when appropriate.

[MP123]

One thing to remember is that health insurance premiums including Medicare are not qualified medical expenses for an HSA until the account holder reaches 65.

So, a younger spouse couldn't pay the older spouse's premiums from their HSA even though the older spouse would be eligible for pay them from their own HSA.

But, other than that, in general, expenses could be paid from either HSA no matter what type of coverage each account owner had at the time of contribution.

Understood and appreciate the insight. Depending on the age of the HSA account(s) in question it would seem simple to reimburse past expenses to, in effect, indirectly reimburse said premiums of the elder spouse from the younger spouse's account. This particular case would seem to justify saving receipts/invoice/EOB statements for any significant medical expenses for either spouse before the elder spouse's Medicare or other premiums are realized at 65+. DW and I document anything $100 or higher and have a pretty decent bank of expenses to draw from when appropriate.

I'm really not sure if the younger spouse, having reached 65, can reimburse the Medicare premiums of the older spouse incurred while the younger spouse was under 65.

It seems a little aggressive to me, but I've never seen any guidance one way or the other about it.

Here's Section 223, which is somewhat ambiguous, but might support it:

https://www.law.cornell.edu/uscode/text/26/223

(2)Qualified medical expenses
(A)In general
The term “qualified medical expenses” means, with respect to an account beneficiary, amounts paid by such beneficiary for medical care (as defined in section 213(d)) for such individual, the spouse of such individual, and any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual, but only to the extent such amounts are not compensated for by insurance or otherwise. For purposes of this subparagraph, amounts paid for menstrual care products shall be treated as paid for medical care.

(B)Health insurance may not be purchased from account
Subparagraph (A) shall not apply to any payment for insurance.

(C)Exceptions
Subparagraph (B) shall not apply to any expense for coverage under—
(i)a health plan during any period of continuation coverage required under any Federal law,
(ii)a qualified long-term care insurance contract (as defined in section 7702B(b)),
(iii)a health plan during a period in which the individual is receiving unemployment compensation under any Federal or State law, or
(iv)in the case of an account beneficiary who has attained the age specified in section 1811 of the Social Security Act, any health insurance other than a medicare supplemental policy (as defined in section 1882 of the Social Security Act).

[AnEngineer]

If you want to use it as temporary liquidity (via a 60 day indirect rollover) it can make a difference how it's split.

[BD w/ Kung-Fu Grip]

(iv)in the case of an account beneficiary who has attained the age specified in section 1811 of the Social Security Act, any health insurance other than a medicare supplemental policy (as defined in section 1882 of the Social Security Act).

Seems to suggest that if I'm 65, I can pay ACA premiums for my younger spouse. Has anyone tried interpreting it that way?

[MP123]

(iv)in the case of an account beneficiary who has attained the age specified in section 1811 of the Social Security Act, any health insurance other than a medicare supplemental policy (as defined in section 1882 of the Social Security Act).

Seems to suggest that if I'm 65, I can pay ACA premiums for my younger spouse. Has anyone tried interpreting it that way?

I agree that it's vague about the timeframe of premiums and people that qualify, just that it becomes allowable at 65.

Taken to an extreme one might interperet it to allow reimbursement of all past healthcare premiums once reaching age 65, and, to be clear, I don't think that's allowed.

[Artsdoctor]

You can't reimburse your spouse for Medicare premiums that were incurred before you turn 65. You can reimburse your spouse for any medical expenses that were incurred retroactively (aside from the premiums). Once the younger spouse turns 65, they can then start reimbursing for Medicare premium expenses.