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I bet someone here knows this stuff


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Wow, I'm not usually the participant in my posts!


My wife and I are in an HDHP through my work, but due to some less-than-optimal coverage she is looking at enrolling in an individual ACA plan this week to start 2/1. 

I may stay on my work's plan (not calendar year).  If so, does that affect my use of the HSA associated with it?  I'd presume only my expenses would be eligible to be paid from it.  Or does anything conflict such that I lose my eligibility?  And the annual maximum contributions would be what, the individual limit times 1.083333?

I don't know if her plan choice will qualify as an HDHP - if it does, is that fine?  We'd be in two separate plans that qualify, so perhaps we could continue with the HSA (although my work wouldn't care about her plan's benefits or fund anything on her behalf) with the full 8300 limit?

 

Am I close?  (This is why I stick to the retirement plan side of the boards!)

Thanks in advance.

--bri

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Ha, thanks for teeing me up here Bill.  Good news is you're fine, Bri.  You can still be HSA-eligible if your spouse is in non-HDHP coverage.  HSA eligibility is on an individual-by-individual basis.  You just need to be in an HDHP and have no disqualifying coverage to be HSA-eligible.

A few things-

  1. You can't just drop employer coverage for the spouse whenever you want.  Is your OE for 2/1?  If not, you'll need a permitted election change event because otherwise your election is irrevocable under the Section 125 cafeteria plan rules for the rest of the plan year.  Make sure you have that in order before the spouse moves to the exchange.
  2. You can always use your HSA for your spouse's medical expenses.  It doesn't matter if the spouse isn't on your health plan, and it doesn't matter if the spouse is HSA-eligible.  HSA eligibility is exclusively about putting money into the HSA.  Tax-free medical distributions are always available for you and your spouse.
  3. If you're in family HDHP coverage for one month and individual HDHP coverage for the remaining months in 2024, you will have a proportional contribution limit. ($8,300 + (($4,150 x 11) / 12) ) = $4,495. 
  4. If your spouse enrolls in an individual HDHP for Feb-Dec, she can contribute up to 11/12 of the individual limit to her own HSA.  So 11/12 x $4,150 = $3,804.  (Subject to the last month rule exception, I won't go into that).  You'll each need separate HSAs at this point.
  5. You won't have the special rule for spouses that allows you to combine the family limit for Feb - Dec, so you each have to contribute to your own HSAs for those months.  The special rule requires that at least one of you be in family HDHP coverage.
  6. There's also a proportional amount of the $1,000 catch-up contribution amount available for each period to your respective HSAs if either of you is 55 (or will be by the end of 2024).

Here's some info walking through all of this in more detail if you're interested:

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