Opening a 2020 'Self Only' HSA in my wife's name

[Time2]

A little setup.
Married, two kids, I'll be 65 and will be on medicare in a month.
We have a HDHP, That I will fall off of, when I go on Medicare in a month.

I have a (family?) HSA, ie I can put about $7,000 a year into it.
As I understand it, my 2020 (family) HSA, I'm only able to put in
2 months of the 12 months because my HDHP will end at the end of FEB.
I get the $1000 catch up, so, $8000 x 2 / 12 = $1,333
My wife and kids will continue on with the HDHP when I go on Medicare.
She is 4 years younger than I am.

Can she open a 'self only' HSA and while I do the 2/12 HSA contribution in the same year?

 

[audreyh1]

It’s not a family HSA. It’s your HSA, which is why contributions aren’t allowed once you turn 65.

Your wife can open her HSA at any time, and make contributions. I guess the main issue is figuring out the limits as perhaps the family limit applies for 2 months and the individual limit applies for the rest of the year. I don’t know the specifics. She can certainly put in the full catch-up contribution for this year.

She can also make contributions for 2019 up until April 15, so she could also put in last year’s catch-up contribution for her.

She can’t pay for qualified medical expenses incurred before she opens the HSA. This is no biggie unless you wanted to reimburse for earlier expenses. She also can’t pay for your qualified Medicare premiums until she turns 65.

 

[pb4uski]

OP, yes.... but you are confused. There is no such thing as a family HSA.... whose name is on the monthly statement? However, a family HSA-eligible HDHP coverage would allow one to open a HSA.

If the existing HSA is yours (your name on the statement) then set up one for your DW for March 2020 onwards.

I've been happy with Fidelity.

 

[Time2]

It’s not a family HSA. It’s your HSA, which is why contributions aren’t allowed once you turn 65.

That's why I put the ?. But I still question it. The sites I look at separate them as 'Family and 'Self Owned'.
As shown on the chart on this page,
https://www.shrm.org/resourcesandto...s/pages/irs-2020-hsa-contribution-limits.aspx

Your wife can open her HSA at any time, and make contributions. I guess the main issue is figuring out the limits as perhaps the family limit applies for 2 months and the individual limit applies for the rest of the year. I don’t know the specifics. She can certainly put in the full catch-up contribution for this year.

She can also make contributions for 2019 up until April 15, so she could also put in last year’s catch-up contribution.

Looks like I really need to dig into this, as, 'is there a limit on HSA contribution/deduction, i.e. Can I have mine which I still want to call family because the contribution is twice as much, and then she can also have one?

She can’t pay for qualified medical expenses incurred before she opens the HSA. This is no biggie unless you wanted to reimburse fir earlier expenses. She also can’t pay for your qualified Medicare premiums until she turns 65.

Our HSA is being saved along with receipts as retirement income.

 

[pb4uski]

That's why I put the ?. But I still question it. The sites I look at separate them as 'Family and 'Self Owned'.
As shown on the chart on this page,
https://www.shrm.org/resourcesandto...s/pages/irs-2020-hsa-contribution-limits.aspx....

Where it says self-only or family in the article it is referring to the HSA-eligible health insurance policy, not the HSA.

So if you have HSA-eligible family coverage and can contribute $7,100 it is $7,100 for husband and wife together... it could be $7,100 husband and $0 wife or the inverse or anything in between. And then on top of that one or the other can do an additional catch-up contribution if they qualify.

Since you are using the HSA to accumulate I particularly recommend Fidelity.... we can't contribute anymore but we have ours invested in a domestic equity fund.

 

[Time2]

OP, yes.... but you are confused. There is no such thing as a family HSA.... whose name is on the monthly statement? However, a family HSA-eligible HDHP coverage would allow one to open a HSA.

If the existing HSA is yours (your name on the statement) then set up one for your DW for March 2020 onwards.

I've been happy with Fidelity.

Does that mean all these years I could have had mine (that I call family)
contribute $7,000, and my wife could have had hers and contribute another $3,500?

 

[pb4uski]

Does that mean all these years I could have had mine (that I call family)
contribute $7,000, and my wife could have had hers and contribute another $3,500?

No.... but if your limit for a particular year was $7,000 you can split that however you wish... $7,000 you and $0 hers or $7,000 hers and $0 yours or anything in between. But catch-up contributions can only go into the account of the person 55 or older.

 

[cathy63]

Looks like I really need to dig into this, as, 'is there a limit on HSA contribution/deduction, i.e. Can I have mine which I still want to call family because the contribution is twice as much, and then she can also have one?

You can each have an HSA account. For 2020, if you were not going on Medicare, you could divide $7100 between the two accounts in any way you like. You could also put an additional $1000 in each account because each of you is over age 55. Since you are going on Medicare, the easiest thing to do will be to open an HSA in your wife's name and put the entire $7100 + $1000 in her new account. You can do this because you still have a family health plan for her and the children.

To maximize your contributions, here's what you should do now:
- open an HSA account for your wife at Fidelity
- deposit $9100 in it before April 15. $1000 is her catch-up contribution for 2019, $7100 is the family HSA contribution for 2020, $1000 is her catch-up contribution for 2020.
- deposit 2/12 of $1000 in your HSA. This is your allowed catch-up contribution for 2020 for the portion of the year when you're not on Medicare.

 

[pb4uski]

+1 works as long as she and the kids stay on the HSA-eligible policy for all of 2020.

 

[audreyh1]

Does that mean all these years I could have had mine (that I call family)
contribute $7,000, and my wife could have had hers and contribute another $3,500?

Combined you were subject to the family limit in contributions but each of you could have made the additional $1000 catch up contribution to their own HSA account once each person reached 55.

 

[audreyh1]

To maximize your contributions, here's what you should do now:
- open an HSA account for your wife at Fidelity
- deposit $9100 in it before April 15. $1000 is her catch-up contribution for 2019, $7100 is the family HSA contribution for 2020, $1000 is her catch-up contribution for 2020.
- deposit 2/12 of $1000 in your HSA. This is your allowed catch-up contribution for 2020 for the portion of the year when you're not on Medicare.

You do have to specify the year for the contribution, so the 2019 catch up contribution has to be done separately from the 2020 contributions.

Since your wife will continue having a family insurance plan that includes children, she should still be subject to the family limit combined with whatever contributions you made for the first two months.

Plus she can make the second $1000 catch-up contribution in her account for 2020 and another for 2019 up until April 15.

Personally I do my HSA contributions monthly or quarterly, just in case....

 

[pb4uski]

.... Question: in March, does your wife’s insurance become an individual insurance plan? - that might have a small effect on the annual contribution limit for her. ....

We're assuming that it will still be family coverage for her and the kids but OP will drop off to go on Medicare.

 

[audreyh1]

We're assuming that it will still be family coverage for her and the kids but OP will drop off to go on Medicare.

Right, I already corrected since I see that kids were still included on the insurance policy.

 

[Time2]

You do have to specify the year for the contribution, so the 2019 catch up contribution has to be done separately from the 2020 contributions.

Since your wife will continue having a family insurance plan that includes children, she should still be subject to the family limit combined with whatever contributions you made for the first two months.

I have not made any 2019 contributions, so I have time to do it right.

Plus she can make the second $1000 catch-up contribution in her account for 2020 and another for 2019 up until April 15.

Personally I do my HSA contributions monthly or quarterly, just in case....

 

[audreyh1]

The family versus individual thing is a common confusion with HSAs, and as pb4uski points out, it’s the insurance that may be family or individual, and the HSAs are always individual even though you can cover family medical expenses from them.

Articles that describe an HSA as family are misleading their readers. It’s not really an issue initially as it doesn’t make a difference in contributions until one reaches 55. If the HSA is in their name, they can then start making the additional $1000 contribution, otherwise they must open their own HSA to do this. So articles that are sloppy on this point can result in readers not taking advantage of the two catch-up contributions available when both spouses are 55.

 

[Time2]

The family versus individual thing is a common confusion with HSAs, and as pb4uski points out, it’s the insurance that may be family or individual, and the HSAs are always individual even though you can cover family medical expenses from them.

This all regards 2019 when we were fully covered by an HDHP.

OK, reading/doing Form 8889, I do see, line 1 is asking if the HDHP is 'Self-Owned or Family' So I now get that.
What I need to understand is the difference between the IRS form and opening the new HSA.




Filling out Form 8889, it does not show the separate contributions only the total. Do I need to fill out two form 8889s?


If you care to look at 8889, https://www.irs.gov/pub/irs-pdf/f8889.pdf
I have filled it as such, Line 1-- Family, Line2--$9,000, Line 3--$7,000, Line 4--$0, Line 5--$7,000, Line 6--$7,000, Line 7--$2,000, Line 8--$9,000, Line 10--$0, Line 11--$0, Line 12--$9,000, Line 13--$9,000.

Do I continue with the plan that covered the family in my name, and open a new HSA in my wife's name?
Then put $3,500 + $1000 catch up, in mine, and do the same for hers?

 

[audreyh1]

Yes, you fill out two 8889 forms, one for each HSA.

I let TurboTax take care of the forms.

 

[cathy63]

This all regards 2019 when we were fully covered by an HDHP.

OK, reading/doing Form 8889, I do see, line 1 is asking if the HDHP is 'Self-Owned or Family' So I now get that.
What I need to understand is the difference between the IRS form and opening the new HSA.




Filling out Form 8889, it does not show the separate contributions only the total. Do I need to fill out two form 8889s?


If you care to look at 8889, https://www.irs.gov/pub/irs-pdf/f8889.pdf
I have filled it as such, Line 1-- Family, Line2--$9,000, Line 3--$7,000, Line 4--$0, Line 5--$7,000, Line 6--$7,000, Line 7--$2,000, Line 8--$9,000, Line 10--$0, Line 11--$0, Line 12--$9,000, Line 13--$9,000.

Do I continue with the plan that covered the family in my name, and open a new HSA in my wife's name?
Then put $3,500 + $1000 catch up, in mine, and do the same for hers?

Let's assume that you open a new HSA account in your wife's name and you contribute $4500 to each of your accounts for 2019. You'll fill out two 8889s, which will be identical except for the SSN at the top. Each will look like this:

Line 1 - Family
Line 2 - $4500
Line 3 - $7000
Line 4 - $0
Line 5 - $7000
Line 6 - $3500
Line 7 - $1000
Line 8 - $4500
Lines 9 - 11 - blank
Line 12 - $4500
Line 13 - $4500
Lines 14 - 21 - blank

Sum the Line 13 numbers from each form to get $9000. Put that total on Schedule 1 Line 12.

 

[Bir48die]

You can each have an HSA account. For 2020, if you were not going on Medicare, you could divide $7100 between the two accounts in any way you like. You could also put an additional $1000 in each account because each of you is over age 55. Since you are going on Medicare, the easiest thing to do will be to open an HSA in your wife's name and put the entire $7100 + $1000 in her new account. You can do this because you still have a family health plan for her and the children.

To maximize your contributions, here's what you should do now:
- open an HSA account for your wife at Fidelity
- deposit $9100 in it before April 15. $1000 is her catch-up contribution for 2019, $7100 is the family HSA contribution for 2020, $1000 is her catch-up contribution for 2020.
- deposit 2/12 of $1000 in your HSA. This is your allowed catch-up contribution for 2020 for the portion of the year when you're not on Medicare.

+1 Bingo