HSA limits for married family with two separate HDHPs

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orcycle
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HSA limits for married family with two separate HDHPs

Post by orcycle »

For 2021, we decided to split our health plans to get the doctors we wanted in-network. So I went solo with my High Deductible Healthcare Plan and my wife and our kids went with a different HDHP. Previously, I took the combined family amount and deposited into my HSA, pretty simple.

With two HDHPs that are not provided by employers, can I apportion the full family amount ($7,200) to my HSA or am I limited to $3,600 and I have to open a new HSA for my wife to contribute the other $3,600? When I searched online, I got differing answers, with one source making a distinction between employer-provided plans and self-provided plans. IRS Publication 969, on page 7 with the example of Ginger and Lucy, does not seem to make that distinction.

Naturally, I would prefer not to open another account if it's not necessary. Thanks for any insights.
nalor511
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Re: HSA limits for married family with two separate HDHPs

Post by nalor511 »

orcycle wrote: Mon Jan 11, 2021 10:26 pm For 2021, we decided to split our health plans to get the doctors we wanted in-network. So I went solo with my High Deductible Healthcare Plan and my wife and our kids went with a different HDHP. Previously, I took the combined family amount and deposited into my HSA, pretty simple.

With two HDHPs that are not provided by employers, can I apportion the full family amount ($7,200) to my HSA or am I limited to $3,600 and I have to open a new HSA for my wife to contribute the other $3,600? When I searched online, I got differing answers, with one source making a distinction between employer-provided plans and self-provided plans. IRS Publication 969, on page 7 with the example of Ginger and Lucy, does not seem to make that distinction.

Naturally, I would prefer not to open another account if it's not necessary. Thanks for any insights.
Eventually you will (if you still have an HSA) be doing separate $1000 catch up contributions for each of you, so may as well set up two accounts now and play it safe
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MP123
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Re: HSA limits for married family with two separate HDHPs

Post by MP123 »

There isn't any distinction between HSA plans contributed to by employers and self funded plans as far as I know. However, it's quite possible that some employers may balk at contributing more than the self-only limit if their employee only has such coverage.

My understanding of the example from Pub 969 matches yours. You might also work through form 8889, in particular note line 3, the instructions for which say (emphasis mine):
When figuring the amount to enter on line 3, apply the following rules.

Use the family coverage amount if you or your spouse had an HDHP with family coverage. Disregard any plan with self-only coverage.
With all that said, I agree with the above that you'll need to have separate HSAs at some point for catchup contributions, so it might be reasonable to start now.
AnEngineer
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Re: HSA limits for married family with two separate HDHPs

Post by AnEngineer »

MP123 wrote: Mon Jan 11, 2021 11:18 pm There isn't any distinction between HSA plans contributed to by employers and self funded plans as far as I know. However, it's quite possible that some employers may balk at contributing more than the self-only limit if their employee only has such coverage.
Note, though, there is a difference in that contributions via payroll deduction do not count as income for payroll tax.
livesoft
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Re: HSA limits for married family with two separate HDHPs

Post by livesoft »

Let me ask an odd question: Could one have 2 families in the sense that one-parent+1 child is on one plan and other-parent+another child is on a 2nd family plan. Thus, each plan could have the separate family limit and the 2 "families" could double up the contributions?
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megabad
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Re: HSA limits for married family with two separate HDHPs

Post by megabad »

livesoft wrote: Tue Jan 12, 2021 9:09 am Let me ask an odd question: Could one have 2 families in the sense that one-parent+1 child is on one plan and other-parent+another child is on a 2nd family plan. Thus, each plan could have the separate family limit and the 2 "families" could double up the contributions?
Lol, no idea. Functionally my answer is no, only because I have never seen a plan that allows one custodial child to be covered and not the other.
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Re: HSA limits for married family with two separate HDHPs

Post by livesoft »

megabad wrote: Tue Jan 12, 2021 9:17 am
livesoft wrote: Tue Jan 12, 2021 9:09 am Let me ask an odd question: Could one have 2 families in the sense that one-parent+1 child is on one plan and other-parent+another child is on a 2nd family plan. Thus, each plan could have the separate family limit and the 2 "families" could double up the contributions?
Lol, no idea. Functionally my answer is no, only because I have never seen a plan that allows one custodial child to be covered and not the other.
It wouldn't make much sense anyways as there would be 2 family deductibles and max-out-of-pocket which would not be good. Maybe the OP has already seen this in action with two separate HDHPs?
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Spirit Rider
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Re: HSA limits for married family with two separate HDHPs

Post by Spirit Rider »

No, you can not make two (2) full family plan contributions unless you are not married.

Under the rules for married people, there is only a single family plan limit. This can be allocated in any manner agreed to by the spouses.

The spouse with family HDHP coverage could contribute $7200/2 = $3600 and the spouse with self-only coverage could contribute their $3600 + ($7200/2 = $3600) = $3600.

However, an employer is required to limit HSA contributions by salary reduction to the employee's coverage limit. The spouse with self-only coverage would have contribute the balance by direct contribution to the HSA custodian.

Note: If the spouse with family coverage's salary is < the SS MTE (2020, $137,700, 2020 = $142,800) and the other spouse's salary is > the SS MTE. It usually would be better for the former to contribute the full family contribution limit by salary reduction.
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Re: HSA limits for married family with two separate HDHPs

Post by MP123 »

livesoft wrote: Tue Jan 12, 2021 9:09 am Let me ask an odd question: Could one have 2 families in the sense that one-parent+1 child is on one plan and other-parent+another child is on a 2nd family plan. Thus, each plan could have the separate family limit and the 2 "families" could double up the contributions?
No, as pointed out above that won't work.

But consider an edge case with two domestic partners (unmarried) that each have a non-dependent adult child under 26. If all four have Family HDHP coverage, and are eligible individuals otherwise, then each of the four can contribute the Family maximum to their own HSA account.
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orcycle
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Re: HSA limits for married family with two separate HDHPs

Post by orcycle »

Thanks for the replies, I didn't think about the extra $1,000 when turning 55, though we still have a few years before that happens. I think I will not open a new account just yet and see what happens in the next few years, maybe the laws will change. And I appreciate novel thinking, of splitting up the children to create two 'families' but since we file jointly, that's a nonstarter.
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Re: HSA limits for married family with two separate HDHPs

Post by the way »

orcycle wrote: Tue Jan 12, 2021 1:14 pm Thanks for the replies, I didn't think about the extra $1,000 when turning 55, though we still have a few years before that happens. I think I will not open a new account just yet and see what happens in the next few years, maybe the laws will change. And I appreciate novel thinking, of splitting up the children to create two 'families' but since we file jointly, that's a nonstarter.
I don't think anyone actually answered your original question, but IMO it depends on whether you are covered by your wife's family coverage. If not, then you are only covered by an individual HDHP and therefore are limited to the 3600 into your HSA. Your wife would have to open an HSA and do the other 3600. Or she also has the option of doing the entire 7200 (with you doing 0 because of the family max). If her HDHP does cover you, then you could do the 7200 yourself.
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orcycle
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Re: HSA limits for married family with two separate HDHPs

Post by orcycle »

the way wrote: Tue Jan 12, 2021 2:46 pm
I don't think anyone actually answered your original question, but IMO it depends on whether you are covered by your wife's family coverage. If not, then you are only covered by an individual HDHP and therefore are limited to the 3600 into your HSA. Your wife would have to open an HSA and do the other 3600. Or she also has the option of doing the entire 7200 (with you doing 0 because of the family max). If her HDHP does cover you, then you could do the 7200 yourself.
Actually, I think people did answer my question, and in reviewing the IRS Publication 969 again ("Rules for married people...both spouses are treated as having family HDHP" (page 7)), I am feeling pretty confident that I can take the full family amount of $7,200 even though I have self-coverage only while my wife has the family HDHP. But if you have any resource that says otherwise, I would like to see it. I plan to transfer the funds to my HSA later this week.
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Re: HSA limits for married family with two separate HDHPs

Post by the way »

orcycle wrote: Tue Jan 12, 2021 4:13 pm
the way wrote: Tue Jan 12, 2021 2:46 pm
I don't think anyone actually answered your original question, but IMO it depends on whether you are covered by your wife's family coverage. If not, then you are only covered by an individual HDHP and therefore are limited to the 3600 into your HSA. Your wife would have to open an HSA and do the other 3600. Or she also has the option of doing the entire 7200 (with you doing 0 because of the family max). If her HDHP does cover you, then you could do the 7200 yourself.
Actually, I think people did answer my question, and in reviewing the IRS Publication 969 again ("Rules for married people...both spouses are treated as having family HDHP" (page 7)), I am feeling pretty confident that I can take the full family amount of $7,200 even though I have self-coverage only while my wife has the family HDHP. But if you have any resource that says otherwise, I would like to see it. I plan to transfer the funds to my HSA later this week.
What? Who actually answered your question? They seem to mostly have gotten off on a tangent of whether 2 family plans allowed more contributions (it doesn't). It may be a case of wishful-reading where you heard the answer you wanted.

I'm making my guess since let's say you had no coverage or non-HDHP single coverage. If your wife's plan didn't cover you, you wouldn't be allowed to make any HSA contribution then (IMO).

Maybe doing a google search will turn up some good examples to clarify.
nalor511
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Re: HSA limits for married family with two separate HDHPs

Post by nalor511 »

nalor511 wrote: Mon Jan 11, 2021 10:42 pm
Eventually you will (if you still have an HSA) be doing separate $1000 catch up contributions for each of you, so may as well set up two accounts now and play it safe
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Re: HSA limits for married family with two separate HDHPs

Post by MP123 »

the way wrote: Tue Jan 12, 2021 4:43 pm I'm making my guess since let's say you had no coverage or non-HDHP single coverage. If your wife's plan didn't cover you, you wouldn't be allowed to make any HSA contribution then (IMO).
Yes, but then you wouldn't be an eligible individual in the first place.

I suggest working through Form 8889 and it's instructions. That's where you'll actually get to take the deduction, and you can see how it all works.
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Re: HSA limits for married family with two separate HDHPs

Post by orcycle »

MP123 wrote: Tue Jan 12, 2021 4:51 pm I suggest working through Form 8889 and it's instructions. That's where you'll actually get to take the deduction, and you can see how it all works.
Good suggestion, I looked at the form and instructions for 2019, Line 6 instructions covers spouses with separate HSAs (except my spouse doesn't have one currently), and it allows for unequal allocations. I have someone who does my tax returns so I will ask them later. Fun fun.
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Re: HSA limits for married family with two separate HDHPs

Post by MP123 »

orcycle wrote: Tue Jan 12, 2021 5:51 pm
MP123 wrote: Tue Jan 12, 2021 4:51 pm I suggest working through Form 8889 and it's instructions. That's where you'll actually get to take the deduction, and you can see how it all works.
Good suggestion, I looked at the form and instructions for 2019, Line 6 instructions covers spouses with separate HSAs (except my spouse doesn't have one currently), and it allows for unequal allocations. I have someone who does my tax returns so I will ask them later. Fun fun.
Line 3 requires you to use the Family contribution amount if either you or your spouse have Family coverage, and it says to disregard any plan with self only coverage.

The way it seems to me is that you're an eligible individual based on your self only coverage, but your contribution limit (which you share with your spouse) is based on their Family coverage.
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Re: HSA limits for married family with two separate HDHPs

Post by the way »

MP123 wrote: Tue Jan 12, 2021 6:17 pm
orcycle wrote: Tue Jan 12, 2021 5:51 pm
MP123 wrote: Tue Jan 12, 2021 4:51 pm I suggest working through Form 8889 and it's instructions. That's where you'll actually get to take the deduction, and you can see how it all works.
Good suggestion, I looked at the form and instructions for 2019, Line 6 instructions covers spouses with separate HSAs (except my spouse doesn't have one currently), and it allows for unequal allocations. I have someone who does my tax returns so I will ask them later. Fun fun.
Line 3 requires you to use the Family contribution amount if either you or your spouse have Family coverage, and it says to disregard any plan with self only coverage.

The way it seems to me is that you're an eligible individual based on your self only coverage, but your contribution limit (which you share with your spouse) is based on their Family coverage.
I think the ambiguity is that the IRS pubs are assuming that family HDHP covers both spouses. The instructions to 8889 equally do this so telling the OP to follow the form doesn't help (since it can be interpreted his way or my way). I'm saying, if the family coverage does not include the husband, then he is not part of the family and cannot make the family contribution.

jeez I just entered it into google and the top hit is an article from kitces which covers this exact case (look for the word "wrinkle"). https://www.google.com/search?q=family+ ... spouse+hsa Then the 5th hit is some sort of irs.gov briefing that covers 3 different examples with the answer "Because H’s family coverage does not cover W, the special rules under section 223(b)(5) do not apply to treat W as having family coverage", which I am guessing can be extrapolated to this case as well.

But if OP has a tax advisor anyway, yeah, why not just check with him first before making any contributions.
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Re: HSA limits for married family with two separate HDHPs

Post by WarAdmiral »

orcycle wrote: Mon Jan 11, 2021 10:26 pm For 2021, we decided to split our health plans to get the doctors we wanted in-network. So I went solo with my High Deductible Healthcare Plan and my wife and our kids went with a different HDHP. Previously, I took the combined family amount and deposited into my HSA, pretty simple.

With two HDHPs that are not provided by employers, can I apportion the full family amount ($7,200) to my HSA or am I limited to $3,600 and I have to open a new HSA for my wife to contribute the other $3,600? When I searched online, I got differing answers, with one source making a distinction between employer-provided plans and self-provided plans. IRS Publication 969, on page 7 with the example of Ginger and Lucy, does not seem to make that distinction.

Naturally, I would prefer not to open another account if it's not necessary. Thanks for any insights.
The spouse with family HDHP coverage could contribute *upto* $7200 and the spouse with self-only coverage could contribute *upto* $3600

However, total contribution of both spouses combined cannot be greater than $7200

Note that this contribution limit also includes any contributions made by your respective employers.
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Re: HSA limits for married family with two separate HDHPs

Post by MP123 »

the way wrote: Tue Jan 12, 2021 6:54 pm
MP123 wrote: Tue Jan 12, 2021 6:17 pm
orcycle wrote: Tue Jan 12, 2021 5:51 pm
MP123 wrote: Tue Jan 12, 2021 4:51 pm I suggest working through Form 8889 and it's instructions. That's where you'll actually get to take the deduction, and you can see how it all works.
Good suggestion, I looked at the form and instructions for 2019, Line 6 instructions covers spouses with separate HSAs (except my spouse doesn't have one currently), and it allows for unequal allocations. I have someone who does my tax returns so I will ask them later. Fun fun.
Line 3 requires you to use the Family contribution amount if either you or your spouse have Family coverage, and it says to disregard any plan with self only coverage.

The way it seems to me is that you're an eligible individual based on your self only coverage, but your contribution limit (which you share with your spouse) is based on their Family coverage.
I think the ambiguity is that the IRS pubs are assuming that family HDHP covers both spouses. The instructions to 8889 equally do this so telling the OP to follow the form doesn't help (since it can be interpreted his way or my way). I'm saying, if the family coverage does not include the husband, then he is not part of the family and cannot make the family contribution.

jeez I just entered it into google and the top hit is an article from kitces which covers this exact case (look for the word "wrinkle"). https://www.google.com/search?q=family+ ... spouse+hsa Then the 5th hit is some sort of irs.gov briefing that covers 3 different examples with the answer "Because H’s family coverage does not cover W, the special rules under section 223(b)(5) do not apply to treat W as having family coverage", which I am guessing can be extrapolated to this case as well.

But if OP has a tax advisor anyway, yeah, why not just check with him first before making any contributions.
Here's a different viewpoint from another non-authoritative source.

https://www-peoplekeep-com.cdn.ampproje ... or-spouses

And another (see Buster and Kirsten option 2)

https://www.theabdteam.com/blog/special ... r-spouses/

If nothing else this shows the quality of information that one can google up! :happy

Run the scenario through TurboTax and see for yourself. Better than relying on internet posters including me.
the way
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Re: HSA limits for married family with two separate HDHPs

Post by the way »

yeah, if the ambiguity cannot be resolved, then still the safest thing is to just open another HSA. I mean why take the risk of the 6% excise tax in case OP ends up being wrong, when the workaround is so easy? Even asking the tax guy or using TT has some risk of them being wrong, whereas there's no chance if using the wife's HSA.
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