We all know that you need a high deductible to contribute to an HSA and have no other coverage. The limit of the HSA premium seems quite simple at first. There is an individual coverage limit and another family coverage limit, which is almost double the individual coverage limit. If you are 55 or older, there is an additional purchase of $ 1,000.
This is great if you only have one health plan all year long. It gets more complicated when you are married and the two of you have different health plans. It gets even more complicated if your policy changes in the middle of the year. The change in insurance may be the result of changes in employment, marriage or divorce, Medicare registration, childbirth, and so on.
Example 1: The man has HDHP coverage for himself. The woman has non-HDHP insurance from her employer. The woman leaves for six months and the mangoes to HDHP.
Example 2: Husband and wife have HDHP for both (childless). Medicare middle-aged man. The woman is left alone for her HDHP.
What is the limit on the HSA premium in these situations?
Before proceeding, it is easier to understand the basic rules.
Limit contributions, not expenses
The limits for planning two plans or provisional changes apply to contributions, that is, sending money to the HSA, not the money already spent on the HSA. Once the money is in the HSA, it can be used for eligible medical expenses incurred by all members of the family (you, spouse, and family members), regardless of who is in the HSA and whether the person is covered.
No HSA connection
Although there is a higher premium limit for family coverage, once paid, HSA money can be used to qualify for medical bills made by someone in the family, but the HSA is in the person’s name. There is no common HSA. Each person’s ability to contribute to their HSA is determined individually.
This is probably the most important part of understanding the HSA premium limit. Once you have pierced your head, everything else becomes easy.
No HDHP coverage = no contribution
As it is an individual account, only the person with HDHP coverage can contribute. Suppose the father covers himself and the children in an HDHP family and the mother does not. Only the father can contribute to an HSA (in family coverage) on his behalf. If the mother is over 55, she will not be able to contribute the first payment of $ 1000 because she is not covered by HDHP.
Only 55 years old
Again, as an HSA suggests a person’s name, a person aged 55 or over can only pay his or her history contribution if he or she qualifies for an initial contribution. If men and women are 55 or older, they must have a separate account to make the maximum contribution.
Both are part of the HDHP family = fractional contribution
If a man and a woman are part of an HDHP family, they can split the HSA limit at the family level as they see fit. It can be 100% on a person’s HSA, 50:50 on individual HSAs in each person’s name, or anything in between. It’s easier to see if you’re dividing 50:50.
Family + Single = Family
If one spouse of a couple has private insurance and another spouse has family coverage through a separate plan (with children, for example), both are considered family coverage. They must share a family coverage limit as if they have only one family plan.
2 Personal plans are not family coverage
On the other hand, if a man and a woman each have their own independent HDHP, they can only contribute to two separate HSAs in their own name. They cannot contribute to a single person’s HSA in family coverage.
Last month’s rule
Finally, there is a “last month rule” which says that if you qualify on December 1st, you can apply for the full calendar year, even if you don’t qualify at the beginning of the year. The big problem is that you have to stay at that level for the next twelve months (January – December next year).
If you keep your promise, you will be forgiven for not being eligible at the start of the year and you can contribute more than you would otherwise. If for some reason you don’t keep your promise, you will have to withdraw the overpaid amount and pay taxes and a fine.
This is a bet that you may not have full control over.
uppose you can contribute to an HSA at the end of the year. You rely on last month’s rule and contribute more throughout the year. You intend to continue following the HSA plan next year, but you change jobs (voluntarily or involuntarily) and your new employer does not offer an appropriate HSA plan. Now you have to overcome many obstacles to calculate the premium surplus from the previous year and understand how to declare the income and the penalty on the tax return.