HSA questions and HELP!

[investmentnewguy]

Hello all,

I recently opened an HSA with fidelity in Dec 2022 and contributed $7300 after tax dollars into the account. I have a wife that works and we are both on her HDHP that qualifies for an HSA and will plan to have the insurance for the entirety of 2023 so there shouldn't be any issue with a catch up penalty. However, I was reading on some other websites that and HSA is technically an individual and that I would have to have an account and so would my wife, and each of use would separately have to contribute $3650 to our individual accounts.

Is this correct?
Did I just totally screw up my account contributions and have to pay a severe tax penalty?
If so, is there anything I can do to correct this?

any help and direction would greatly be appreciated.

Thanks!

[spiritrider]

Under the rules for married people. If one spouse has a family HDHP both spouses are treated as HSA eligible individuals. Unless they have "other" disqualifying coverage.

The family contribution limit can be allocated in any manner agreed to buy the spouses. It was entirely proper for you to open an HSA and make the full family contribution.

However, if your spouse could have opened an HSA thru her employer and made HSA contributions by salary reduction. Such contributions would be exempt from FICA taxes.

Note: The HSA contribution limit includes any true contributions from the employer. If the employer made any such contributions, you would have excess contributions by that amount.

[Jefe]

Hi, I think you are golden as long as your wife agrees with the distribution. From personal experience, I have not run into an issue with a 100%-0% family contribution split to our HSA.

From IRS:

Rules for married people.

If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. If each spouse has family coverage under a separate plan, the contribution limit for 2022 is $7,300. You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses’ Archer MSAs. After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division.

Single or multiple HSA accounts is treated on line 6 of Form 8889:

Spouses who have separate HSAs and had family coverage under an HDHP at any time during 2022, use the following rules to figure the amount on line 6.

If you are treated as having family coverage for each month, divide the amount on line 5 equally between you and your spouse, unless you both agree on a different allocation (such as allocating nothing to one spouse). Enter your allocable share on line 6.

Example.

In 2022, you are an eligible individual and have self-only HDHP coverage. In March, you marry and as of April 1, you have family HDHP coverage. Neither you nor your spouse qualify for the additional contribution amount. Your spouse has a separate HSA and is an eligible individual from April 1 to December 31, 2022. Because you and your spouse are considered to have family coverage on December 1, your contribution limit is $7,300 (the family coverage maximum). You and your spouse can divide this amount in any allocation to which you agree (such as allocating nothing to one spouse).

[jfoxcpacfp]

What do you mean that you contributed “after tax” dollars to your HSA?

[investmentnewguy]

My wife’s health plan does not offer an HSA so she is unable to contribute pre-tax money from her paycheck. Because of this I opened an independent HSA with fidelity and contributed post-tax money to it. I will file tax forms about the HSA and should get a rebate on decrease on my tax burden in the amount I contributed.

another question for anyone reading:

when you are contributing to an HSA through the calendar year, can you just contribute the total amount in one lump sum on Jan 1st(for example) or do you have to make more scheduled additions?

[jfoxcpacfp]

My wife’s health plan does not offer an HSA so she is unable to contribute pre-tax money from her paycheck. Because of this I opened an independent HSA with fidelity and contributed post-tax money to it. I will file tax forms about the HSA and should get a rebate on decrease on my tax burden in the amount I contributed.

another question for anyone reading:

when you are contributing to an HSA through the calendar year, can you just contribute the total amount in one lump sum on Jan 1st(for example) or do you have to make more scheduled additions?

You always get a tax deduction for HSA contributions, so you are making pre-tax contributions. You can contribute the full amount at the BOY, although I would make sure you have the earned income to support it. You have until the due date of your tax return (NOT including extensions) to contribute, though.

ps - welcome to the forum!

[spiritrider]

You can certainly make a contribution up to the limit on the first business day of the year. Just be aware that the contribution limit is prorated based on number of months you are HSA eligible on the 1st of the month.

If you do not maintain eligibility for the entire year, you will have excess contributions of the prorated amount. You would have to remove the excess contributions and taxable earnings by your tax filing deadline including extensions. Or pay an annual 6% excise tax until the excess contribution balance is reconciled.

[investmentnewguy]

Ok. That all makes sense. Thank you all for helping me with my questions. I really appreciate the help and advice.