HSA Contribution year turning 65

Submitted by MIKE KRUCHTEN on Sat, 2019-08-24 21:50

Husband turning 65 in October and former employer provides retiree health coverage for himself and spouse. It’s my understanding his spouse (age 62) can open a HSA in 2019 for $8,000 since she is under 65 and covered under same plan. Whereas if he make contribution it would be prorated until month he reaches age 65. Thou it’s his former company providing HDHP coverage she can still take advantage of HSA to maximize contribution? Their CPA unsure and was no help!!! Any information would be appreciated?



Submitted by David Mertz on Sat, 2019-08-24 23:18

  • To be eligible to contribute to an HSA, she only needs to be covered by an HDHP plan and have no disqualifying coverage such as Medicare.  It doesn’t matter that her HDHP coverage is through the plan provided by her husband’s former employer.  So you are correct, since she has family HDHP coverage and no disqualifying coverage such as Medicare, she is eligible to contribute to her HSA the family limit for the entire year (reduced by the amount of any of the family contribution limit the husband makes to his HSA for the months 9 months he is eligible to contribute) plus her full-year catch-up contribution.  The husband is will be eligible to contribute only the 9/12 prorated amount of his catch-up contribution to his HSA.
  • In other words, the husband will be eligible to contribute to his HSA up to 9/12 of the family limit for 2019, $5,250, and the sum of the regular contributions between the husband’s HSA and his spouse’s HSA cannot exceed the full family limit of $7,000.  The husband can make a catch-up contribution of $750 to his HSA and his spouse can make a catch-up contribution of $1,000 to her HSA.
  • See IRS Pub 969 Chapter 2 where is discusses qualifying for an HSA, the limit on contributions and the rules for married people:  https://www.irs.gov/pub/irs-pdf/p969.pdf

Submitted by William Tuttle on Sat, 2019-08-24 23:23

  • Age 65 has no particular direct meaning for HSA eligibility. It is the enrollment in Medicare that makes an individual ineligible for HSA contributions. This can either be because the indiviual starts claiming Social Security benefits at age 65 which results in an automatic enrollment in Medicare or the retiree health converage (as most do) requires the enrollment in at least Medicare Part A at 65.
  • When the husband turns 65 in October does the retiree HDHP health coverage change from family coverage to individual coverage for the wife? If yes:
  • The family plan is only for 9 months (Jan – Sep), the maximum contribution is prorated to $7,000 * 9 / 12 = $5,250. Under the rules for married people this amount can be allocated between the spouses in any way they agree to. 
  • However, each spouse’s catch-up contribution must be to their own HSA account. The husband can only make a catch-up contribution for the first 9 months of $1,000 * 9 / 12 = $750. The spouse can make the full $1,000 catch-up contribution.
  • The spouse’s individual plan contribution will be for the last 3 months $3500 * 3 / 12 =  $875.
  • Botom line is that the $5,250 family plan contribution can be divided between the spouses HSA accounts in any way they choose, The wife’s $875 individual plan contribution must be made to her HSA account. The husband’s $750 catch-up contribution must be made to his own HSA account and the Wife’s 1,000 catch-up contribution must be made to her own HSA account for a total of $7,875.
  • If the HDHP family plan continues for all of 2019.
    • The full $7,000 family contribution limit can be allocated in anyway the spouses choose, the husband can contribute a $750 catch-up contribution and the wife can contribute $1,000 for a total of  $8,750.

    Submitted by David Mertz on Sun, 2019-08-25 01:44

    Since the HDHP plan is through the husband’s former employer, I did assume in my earlier response that the family plan would continue.  Assuming that the family plan does continue and husband’s Medicare coverage begins October 1, the $7,000 family limit can be allocated in any way the spouses choose as long as no more than 9/12 of the $7,000 family limit, $5,250, is allocated to the husband’s HSA.

    Submitted by William Tuttle on Sun, 2019-08-25 02:42

    • Most retiree health insurance plans change coverage when a covered individual turns 65. They are required to enroll in Medicare Part A and often Part B (sometimes reimbursed by the plan). The plan then provides a Medigap-like or even an actual Medigap plan.
    • Then only a  spouse and/or dependent remain covered under the standard employee plan. If there are no dependents that plan will usually drop to an individual plan.

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