Multiple HSA contributions

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Topic Author
Aku09
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Joined: Wed Jan 09, 2019 11:29 am

Multiple HSA contributions

Post by Aku09 »

Currently my family and I are covered through a HDHP through my work and an HSA is offered. Through my benefits my entire medical coverage is paid for, but I pay the full cost of my families policy. For medical alone it is $1100 a month for a $6k deductible policy for them. My employer also contributes $80 a month to my HSA (I have been contributing the rest to max mine out).

My wife is a school teacher and we plan on switching the kids and her to her work plan. It would save roughly $700 a month in premiums for medical insurance and also qualify for a HSA with a deductible of $4300.

So my employer emailed the benefits group that handles this for us and I was told that I would only be able to max out my HSA for the individual max now. Current HSA costs me $2.90 a month to maintain it and another $2.90 to invest it, but has some good vanguard funds in it. Since my employer contributes $80 a month to it there is no point in me closing this account.

Is my best option to open another HSA for my wife and kids through fidelity? I am unsure if her work offers an HSA (even if they did their fees for retirement are atrocious and I imagine an HSA would be similar). If my understanding is correct I would contribute post tax dollars to the fidelity HSA and then at the end of the year at tax time when inputting information it would essentially true up my taxes and decrease my overall tax bill for the year. Does all of this sound correct?

Thanks!
sailaway
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Re: Multiple HSA contributions

Post by sailaway »

Aku09 wrote: Fri Aug 28, 2020 2:43 pm Does all of this sound correct?

Thanks!
Yes, but...if you are under the FICA income limit ($132k?), if you contribute via payroll deductions, you will also save the payroll taxes. If you are above the limit, you will end up paying them anyway, so not worth making any fuss. However, I doubt your wife is above the limit as a school teacher, so that possibility may be worth exploring at her workplace.
Topic Author
Aku09
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Re: Multiple HSA contributions

Post by Aku09 »

My wife is under as she makes about 40k a year. I make 200k.
Topic Author
Aku09
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Re: Multiple HSA contributions

Post by Aku09 »

:sharebeer
sailaway wrote: Fri Aug 28, 2020 2:53 pm
Aku09 wrote: Fri Aug 28, 2020 2:43 pm Does all of this sound correct?

Thanks!
Yes, but...if you are under the FICA income limit ($132k?), if you contribute via payroll deductions, you will also save the payroll taxes. If you are above the limit, you will end up paying them anyway, so not worth making any fuss. However, I doubt your wife is above the limit as a school teacher, so that possibility may be worth exploring at her workplace.
Also, does it matter that my wife does not contribute to social security as they have a pension instead?
sailaway
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Re: Multiple HSA contributions

Post by sailaway »

Aku09 wrote: Fri Aug 28, 2020 4:12 pm :sharebeer
sailaway wrote: Fri Aug 28, 2020 2:53 pm
Aku09 wrote: Fri Aug 28, 2020 2:43 pm Does all of this sound correct?

Thanks!
Yes, but...if you are under the FICA income limit ($132k?), if you contribute via payroll deductions, you will also save the payroll taxes. If you are above the limit, you will end up paying them anyway, so not worth making any fuss. However, I doubt your wife is above the limit as a school teacher, so that possibility may be worth exploring at her workplace.
Also, does it matter that my wife does not contribute to social security as they have a pension instead?
It probably still matters, as SS is only part of your payroll taxes, but it matters less.
terran
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Re: Multiple HSA contributions

Post by terran »

Aku09 wrote: Fri Aug 28, 2020 4:12 pm Also, does it matter that my wife does not contribute to social security as they have a pension instead?
If she's also exempt from medicare tax then there would be no advantage to contributing to her HSA through payroll deduction and you may as well contribute to Fidelity. If she does still pay medicare tax then she could likely save on that by contributing to her HSA through payroll deduction and she wouldn't be subject to the disadvantage of lower social security since she isn't paying into that anyway.
Topic Author
Aku09
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Re: Multiple HSA contributions

Post by Aku09 »

terran wrote: Sat Aug 29, 2020 12:21 am
Aku09 wrote: Fri Aug 28, 2020 4:12 pm Also, does it matter that my wife does not contribute to social security as they have a pension instead?
If she's also exempt from medicare tax then there would be no advantage to contributing to her HSA through payroll deduction and you may as well contribute to Fidelity. If she does still pay medicare tax then she could likely save on that by contributing to her HSA through payroll deduction and she wouldn't be subject to the disadvantage of lower social security since she isn't paying into that anyway.
She does pay Medicare tax, but that should be the only thing we are missing out on. I will just open another HSA with fidelity for the other half of the family contribution.
terran
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Re: Multiple HSA contributions

Post by terran »

Aku09 wrote: Sun Aug 30, 2020 11:21 am
terran wrote: Sat Aug 29, 2020 12:21 am
Aku09 wrote: Fri Aug 28, 2020 4:12 pm Also, does it matter that my wife does not contribute to social security as they have a pension instead?
If she's also exempt from medicare tax then there would be no advantage to contributing to her HSA through payroll deduction and you may as well contribute to Fidelity. If she does still pay medicare tax then she could likely save on that by contributing to her HSA through payroll deduction and she wouldn't be subject to the disadvantage of lower social security since she isn't paying into that anyway.
She does pay Medicare tax, but that should be the only thing we are missing out on. I will just open another HSA with fidelity for the other half of the family contribution.
In that case I guess it just depends on whether saving an extra 1.45% is worth it to contribute to her workplace plan and then transfer to Fidelity. There's usually a transfer fee, but you can avoid this by taking a distribution and then contributing to Fidelity as a rollover contribution. You can do this once per rolling 12 month period (not per calendar year).
Topic Author
Aku09
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Re: Multiple HSA contributions

Post by Aku09 »

terran wrote: Sun Aug 30, 2020 11:35 am
Aku09 wrote: Sun Aug 30, 2020 11:21 am
terran wrote: Sat Aug 29, 2020 12:21 am
Aku09 wrote: Fri Aug 28, 2020 4:12 pm Also, does it matter that my wife does not contribute to social security as they have a pension instead?
If she's also exempt from medicare tax then there would be no advantage to contributing to her HSA through payroll deduction and you may as well contribute to Fidelity. If she does still pay medicare tax then she could likely save on that by contributing to her HSA through payroll deduction and she wouldn't be subject to the disadvantage of lower social security since she isn't paying into that anyway.
She does pay Medicare tax, but that should be the only thing we are missing out on. I will just open another HSA with fidelity for the other half of the family contribution.
In that case I guess it just depends on whether saving an extra 1.45% is worth it to contribute to her workplace plan and then transfer to Fidelity. There's usually a transfer fee, but you can avoid this by taking a distribution and then contributing to Fidelity as a rollover contribution. You can do this once per rolling 12 month period (not per calendar year).
There is not an HSA offered at her job is the problem. We are switching her and the kids health insurance to her job and I will keep mine at my job. This will save $700 a month for slightly better insurance. My job offers and contributes to a HSA and I max out the rest. The problem is that my job won’t let me continue to contribute the family max to my HSA if I only have individual health insurance. So the options are to forgo half of the HSA max or open an additional one at fidelity for her.
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theRoCK
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Re: Multiple HSA contributions

Post by theRoCK »

Since you are already paying the monthly fees at your current HSA, and if you like the options for investment, you could still contribute the full family limit to that HSA. You just cannot do it through payroll. You can choose to send in a check or ACH transfer for the remaining amount over the individual limit to your HSA provider directly, the same as you planned to do for the Fidelity HSA.
Olemiss540
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Re: Multiple HSA contributions

Post by Olemiss540 »

I would not contribute anything to your workplace HSA and instead contribute the maximum to fidelity or your spouse's HSA.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
TropikThunder
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Re: Multiple HSA contributions

Post by TropikThunder »

Aku09 wrote: Sun Aug 30, 2020 6:16 pm There is not an HSA offered at her job is the problem.
I would be extremely careful to make sure her coverage is actually HSA-eligible. Having a high deductible (and out of coverage max) are necessary but not sufficient to make a plan HSA-eligible. There also has to essentially be no coverage provided before the deductible is met except for wellness/preventative care. If there are for example co-pays for a doctor visit or lab tests before you meet the deductible, that's not an HSA-eligible plan. It boggles the mind that a (public?) school system would have HSA-eligible HDHP coverage for their employees but not also have an HSA to allow for contributions via payroll deduction (and/or employer contributions). Are you sure she won't have an HRA instead? Does her coverage actually have "HSA" in the plan name?
Topic Author
Aku09
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Re: Multiple HSA contributions

Post by Aku09 »

There are 4 different plans she can choose from A-D. D is the only one that says it is a HDHP and is eligible for an HSA. It does have copays before the deductible though. I have never heard that you can’t have copays and it be a HDHP.
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Nate79
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Re: Multiple HSA contributions

Post by Nate79 »

Aku09 wrote: Mon Aug 31, 2020 8:54 pm There are 4 different plans she can choose from A-D. D is the only one that says it is a HDHP and is eligible for an HSA. It does have copays before the deductible though. I have never heard that you can’t have copays and it be a HDHP.
Call the insurance company and get in writing that thr health plan is HSA eligible. If they won't and the documentation or title of the plan doesnt say it is HSA eligible then it isn't. Full stop until this is in writing.
Spirit Rider
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Re: Multiple HSA contributions

Post by Spirit Rider »

As has been pointed out, having a deductible > the HSA minimum deductible is not sufficient to be considered an HDHP. A health insurance plan is not an HDHP if it provides any other coverage other than (preventive, etc...) before the HSA minimum deductible is met.

The two most common ways a health insurance plan with a qualifying minimum high deductible is not an HSA qualified HDHP is when:
  1. co-pays or co-insurance provide non-permitted coverage before the minimum HSA deductible is met.
  2. there is an embedded individual deductible in a family plan < the family HSA minimum deductible.
Topic Author
Aku09
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Re: Multiple HSA contributions

Post by Aku09 »

It specifically states this plan is eligible for an HSA. A link to the various plans is: http://www.egtrust.org/wp-content/uploa ... INAL-1.pdf

She has access to join A-D and it states that plan D is HSA eligible. I don’t doubt her school district is without an HSA as it is a very small district graduating less than 20 students a year usually.
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MP123
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Re: Multiple HSA contributions

Post by MP123 »

Aku09 wrote: Tue Sep 01, 2020 7:20 pm It specifically states this plan is eligible for an HSA. A link to the various plans is: http://www.egtrust.org/wp-content/uploa ... INAL-1.pdf

She has access to join A-D and it states that plan D is HSA eligible. I don’t doubt her school district is without an HSA as it is a very small district graduating less than 20 students a year usually.
Note that the copayments aren't in effect until you exceed the deductible. You have to pay the full discounted fee (without copayments) until then.
Spirit Rider
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Re: Multiple HSA contributions

Post by Spirit Rider »

MP123 wrote: Tue Sep 01, 2020 7:24 pm Note that the copayments aren't in effect until you exceed the deductible. You have to pay the full discounted fee (without copayments) until then.
A very relevant piece of information that the OP did not know/provide.

Note: This plan's deductibles are exactly the minimum HSA deductible. If they were higher, co-pays/co-insurance could start when the minimum HSA deductible is met not waiting for the plan deductible.
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