HSA Confusion for First Timer

[N02L84ER]

We both have HSAs with a family HDHP. What I did to reduce fees the first year was to open the account in early April last year with contributions for both the previous year (2012) and the then current year (2013) split evenly. We only had to pay the fee for 2013, although I did get a notice requesting the fees for 2012 but a phone call confirmed I/we did not have to pay them because of the opening date. I will be eligible for the catch-up amount this year. We are not planning to withdraw any funds for 13 or more years, so we have them invested in stocks and they are up over 20% so far, even after the fees.

 

[tessaduncan]

Has anyone funded an HSA with funds from an IRA? I understand it can be done only once and up to the HSA contribution limit. If one has a family plan, can both spouses contribute the maximum to their own HSAs? With 2 spouses on a family plan and catch-up for each, the total amount would be $15,100... sort of a Roth conversion with no tax consequences??

 

[LOL!]

Has anyone funded an HSA with funds from an IRA? I understand it can be done only once and up to the HSA contribution limit. If one has a family plan, can both spouses contribute the maximum to their own HSAs? With 2 spouses on a family plan and catch-up for each, the total amount would be $15,100... sort of a Roth conversion with no tax consequences??

Both spouses can contribute the maximum to their own family-plan HSAs as long as they are not married to each other.

http://www.irs.gov/pub/irs-prior/p969--2013.pdf has details.

I guess in theory that with 2 kids, the family could have 2 HDHPs and each parent could put one child on their plan. It would be a little insane because the costs would be much more than any benefit.

 

[tessaduncan]

I was not aware that HSA costs would be high. We have never had an HDHP plan/HSA before. We're considering one now as my DH changes insurance plans to that of his new employer.

What are the pros and cons of doing an IRA 'rollover'?

 

[MichaelB]

We went for separate accounts because I misunderstood the catch up rule. Two HSA accounts is a PITA, especially when they are used for investment. The only potential problem is the account cannot be joint, has to be in the name of the primary policyholder.

You don't need to merge them. As LOL pointed out, if your HDHP is a family plan, just deposit the total yearly contribution in your account and close the other one.


Good question. My guess is when your husband retires, if the HSA account is in his name, the bank won't take any more deposits and you'll need to open a second account. Smart move is to do that now, keep all the funds in the account in your name so you can continue depositing until you hit Medicare age.

Both spouses can contribute the maximum to their own family-plan HSAs as long as they are not married to each other.

http://www.irs.gov/pub/irs-prior/p969--2013.pdf has details.

I guess in theory that with 2 kids, the family could have 2 HDHPs and each parent could put one child on their plan. It would be a little insane because the costs would be much more than any benefit.

From the link

If both spouses meet the age re-quirement, the total contributions under family coverage cannot be more than $8,450. Each spouse must make the additional contribution to his or her own HSA

So, for catch-up contributions each spouse must make it it in a separate HSA account. This is how I originally understood it, changed my view based on a past discussion (and didn't read the IRS pub).

Has anyone funded an HSA with funds from an IRA? I understand it can be done only once and up to the HSA contribution limit. If one has a family plan, can both spouses contribute the maximum to their own HSAs? With 2 spouses on a family plan and catch-up for each, the total amount would be $15,100... sort of a Roth conversion with no tax consequences??

I think you're confusing the total out of pocket with the HSA contribution. The max HSA contribution for 2014 is $6550 for a family plan, plus an additional $1k catch up for over age 55.

 

[tessaduncan]

MichaelB - I am aware that the HSA contribution is as you stated. ($6550 + $1000) x 2 = $15,100 for a couple. Can that amount be '"rolled over" from IRAs into an HSA (a one-time event)? Or is it subject to the same limits as contributions?

 

[LOL!]

MichaelB - I am aware that the HSA contribution is as you stated. ($6550 + $1000) x 2 = $15,100 for a couple. Can that amount be '"rolled over" from IRAs into an HSA (a one-time event)? Or is it subject to the same limits as contributions?

It is NOT x 2. It is X 1 because it is a FAMILY plan. It is $6550 for the family HDHP plan plus any catch-up. A married couple with one family HDHP cannot contribute more thant $6550 plus any catch-ups to the HSA. Please read the IRS publication.

My previous response was if you had TWO HDHPs. One for each parent+child. Two HDHPs would cost you twice as much as one HDHP. It is not the HSA that costs you twice as much. It is the cost of the second HDHP that you don't even need since the first HDHP would have covered the other 2 members of the family.

In our family, one spouse has their own employee-sponsored health insurance. The other spouse plus kids are on a HDHP and associated HSA. The "family" in the family plan HDHP excludes the spouse with their own separate health insurance.

 

[tessaduncan]

Gotcha. I was told each person could have their own HSA and thus fund it with their own IRAs. So glad there's this forum with the most patient people!