I need suggestions how to fix problem with HSA account

[Tom52]

I read in a recent thread that it is required to have two separate HSA accounts in order to take advantage of the 55+ $1,000 additional HSA contribution for a total of $7,650 for year 2015. So as to not hi-jack that thread I am starting a new one because I need some ideas how to straighten out a mess with my HSA account.

I started an HSA in December 2014 when I first purchased a health insurance policy thru ACA, this was for a one month HSA eligible policy starting December 1, 2014.. In reading the information, I saw that the maximum contribution for 2014 was $7,550 if spouse and I were both 55+. I went to my local bank and opened an HSA account with them and made the initial contribution for 2014 in the amount of $7,550. The bank must not be very knowledgeable about HSA accounts either, because they let me set up an account that is jointly in both our names and took the initial $7,550 contribution. Then in early 2015 I made another contribution to this HSA account for another $7,500. Since that time we have been paying qualified medical bill for the both of us from this one account. By the way, even though the checks for this HSA account have both our names on them, the debit card for the account only lists my name on it.

So, my predicament is that in order to take advantage of the 55+ catch up for the last two years I would have needed these monies split into two separate accounts. I guess I will have to go to the bank to see what if anything can be done to straighten out the mess. I wonder if they will be much help since they allowed me to do something that should not have been allowed in the first place.

You folks here have a lot of knowledge so if you have any suggestions how I might correctly straighten this out it would be appreciated. I would like to kick in the extra $1,000 because I am using the HSA contributions to reduce my MAGI for the ACA subsidy. Just as an added note, I am not sure how the HSA contribution was handled for 2014 taxes, I would have to dig out the tax forms, but TT seemed to not have a problem.

 

[MBSC]

You only made the catch up contribution for one spouse since it is a shared HSA. If you had separate HSA accounts, you could have contributed $8,550 in 2014. The catch up limit is $1,000 per account so no harm done in 2014.

Rules for married people. If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. If each spouse has family coverage under a separate plan, the contribution limit for 2014 is $6,550.

If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,550. Each spouse must make the additional contribution to his or her own HSA.

Reference: https://www.irs.gov/publications/p969/ar02.html

The 2015 limit is $8,650 for family coverage with separate HSA accounts and both 55+.
Reference: HSA Guidelines Update - March 2015 - Insurance Trust

 

[bingybear]

I read in a recent thread that it is required to have two separate HSA accounts in order to take advantage of the 55+ $1,000 additional HSA contribution for a total of $7,650 for year 2015. So as to not hi-jack that thread I am starting a new one because I need some ideas how to straighten out a mess with my HSA account.

I started an HSA in December 2014 when I first purchased a health insurance policy thru ACA, this was for a one month HSA eligible policy starting December 1, 2014.. In reading the information, I saw that the maximum contribution for 2014 was $7,550 if spouse and I were both 55+. I went to my local bank and opened an HSA account with them and made the initial contribution for 2014 in the amount of $7,550. The bank must not be very knowledgeable about HSA accounts either, because they let me set up an account that is jointly in both our names and took the initial $7,550 contribution. Then in early 2015 I made another contribution to this HSA account for another $7,500. Since that time we have been paying qualified medical bill for the both of us from this one account. By the way, even though the checks for this HSA account have both our names on them, the debit card for the account only lists my name on it.

So, my predicament is that in order to take advantage of the 55+ catch up for the last two years I would have needed these monies split into two separate accounts. I guess I will have to go to the bank to see what if anything can be done to straighten out the mess. I wonder if they will be much help since they allowed me to do something that should not have been allowed in the first place.

You folks here have a lot of knowledge so if you have any suggestions how I might correctly straighten this out it would be appreciated. I would like to kick in the extra $1,000 because I am using the HSA contributions to reduce my MAGI for the ACA subsidy. Just as an added note, I am not sure how the HSA contribution was handled for 2014 taxes, I would have to dig out the tax forms, but TT seemed to not have a problem.

you do not have to split all contribution, just the catch up $1k need to be put into each spouse's account. There are no real joint accounts.

As noted MSBC... It looks like you only contributed one catch up.

taxes on form 8889 and 1040 line 25

 

[Theseus]

You only made the catch up contribution for one spouse since it is a shared HSA. If you had separate HSA accounts, you could have contributed $8,550 in 2014. The catch up limit is $1,000 per account so no harm done.

So there: breathe in, breath out. All is good.

I was thinking that 2014 tax return preparation should have thrown up a red flag on that one, MBSC's response shows why it didn't. Of course even if there was a problem, there is always the plausible deniability defense.

 

[Tom52]

Thank you for the responses, it is a relief to know that I do not have any problems tax wise since I only contributed one catch up in 2014. Silly me, I thought the $1,000 was combined max +55 catch up contribution for both of us.
Going forward, would it be an advantage to set up separate HSA accounts starting in 2016? Or am I basically locked into the family HSA account? Is a family HSA account a problem once I reach Medicare age, while only the wife would be on an HSA qualified ACA policy? I am currently 63 and DW is 61 so we have 2 more years before I start Medicare.
It sounds like I could go in tomorrow and set up a separate HSA account for DW and contribute $1,000 for calendar year 2015. If I do this, going forward are we somehow restricted to pay DW medical expenses from only her separate account?
I suspect I am over thinking/worrying about this, why else would I be up writing this response at 12:51 AM.

 

[MBSC]

Reference: https://www.key.com/personal/savings/health-savings-account-faq.jsp

Can I use the money in my HSA to pay for medical care for a family member?

Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse or a dependent without tax penalty.

You have until you file your 2015 tax return early next year to open and make a 2015 contribution to an HSA account for the spouse that does not currently have one.

The "family" HSA account is assigned to one spouse (the primary). You said the debit card has your name on it so it is probably you but don't take my word on it. Check with the HSA custodian.

Q. Who is the owner of the Health Savings Account? Can the owner designate a beneficiary? Can the account be held in joint ownership?
A. No, the account cannot be held in joint ownership. There is only a primary account holder. Family members can use debit cards and checks, but are restricted from receiving all account information. Beneficiaries can be designated.

Source: What is a Health Savings Account (HSA)? - Blue Cross Blue Shield of Illinois

 

[pb4uski]

Is your wife also covered by the HSA eligible HDHI plan? If so, then I would go in and verify the state of the account you set up last year (make it your account) then set up a separate account for your wife and then fund it with the extra $1,000.

 

[Tom52]

Again, thanks for all the input. Yes, wife is also covered by the same HSA eligible HDHI policy. Therefore, I am seriously considering setting up an HSA account in her name so we can add the additional $1,000 for her +55 contribution.

 

[pb4uski]

Oh, and by the way, I have never paid a bill from our HSAs. I view them as an adjunct to our Roth IRAs in that they will grow tax-free as long as we spend the money on qualified health care expenses. I keep a running tally of our qualified health care expenses since we set them up (that I just paid from our bank accounts) and could withdraw that total amount tax-free at any time.