How contributions work for family HSA
Q. I picked a high-deductible health insurance policy for 2018 that covers my whole family. How much can I contribute to a health savings account in 2018? Can my wife also contribute to an HSA, or am I the only one who can make the contribution because the HSA is through my work?
A. Because your HSA-eligible policy covers your family, you’ll be able to contribute up to $6,900 to an HSA in 2018. People with individual coverage can contribute up to $3,450 in 2018. If you or your spouse are 55 or older, you each can contribute an extra $1,000.
When you have family coverage, you and your spouse can divide your $6,900 contribution however you’d like. You can contribute the full $6,900 to your own HSA, or you and your wife can each contribute $3,450 to your own accounts, or any variation that equals $6,900. (If you each had individual health insurance coverage rather than a family plan, you would each have a separate $3,450 limit.)
HSAs are owned individually, not jointly, but you can use the money tax-free for your own, your spouse’s and your dependents’ medical expenses, regardless of which spouse’s account you tap.
Kevin Robertson, chief revenue officer at HSA Bank, which administers such accounts, says that the most common scenario is for one spouse to contribute the full amount for family coverage to his or her own account. That’s because it’s simple and most accounts are opened through an employer.
Contributing to the HSA through your employer lets you use payroll deductions to make pretax HSA contributions. That gives you the added benefit of avoiding Social Security taxes on your contributions, in addition to allowing you to bypass income taxes on the money. Plus, your employer may match your contributions.
Your spouse will need to open a separate HSA, however, if he or she is 55 or older and wants to make a $1,000 catch-up contribution, Robertson says.
Another interesting quirk of the HSA law is the contribution limit for adult children covered by a family policy. Young adults can stay on their parents’ policy until age 26. If they’re covered by an HSAeligible family policy and aren’t tax dependents, they can contribute up to $6,900 apiece to their own HSAs, in addition to the $6,900 that their parents can contribute.
However, because the adult child is no longer a tax dependent, the parents can’t use their HSA funds tax-free for the adult child’s eligible medical expenses; the adult child would need to use his or her own HSA funds for that, says Roy Ramthun, president of HSA Consulting Services.