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How HSA contribution limits work for spouses

Written by: Elizabeth Walker
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Published on October 14, 2022.

Health savings accounts (HSAs) are increasingly popular, having grown to 31 million accounts holding roughly $92.9 billion in assets in 2021, according to Devenir research1.

Because of their popularity, it’s not uncommon for two spouses to each have their own HSA. Though this scenario brings with it specific rules, it is possible for a married couple to have two HSAs—one for each spouse—under certain conditions.

In this article, we’ll go over the regulations for HSA contributions, the advantages of having two separate HSAs, and how HSAs work alongside health reimbursement arrangements (HRAs).

Check out our complete guide to HSAs for more information

What is a health savings account?

First, let’s go over what an HSA is. HSAs are savings accounts where pre-tax money is contributed to pay for medical services and other qualifying out-of-pocket expenses.

They can be opened by an individual or offered by an employer alongside an HSA-qualified high-deductible health plan (HDHP). Both you and your employer can contribute to the HSA, and the funds stay in the account indefinitely. However, you will always own it.

HSAs come with many benefits. You’ll receive a 100% federal income tax deduction on annual contributions. The funds you withdraw to pay for qualified out-of-pocket medical expenses are also tax-free. Funds also roll over yearly, growing in your account like a tax-free investment.

Lastly, most HSAs issue a credit or debit card, so you can quickly pay for qualified health expenses via card without dealing with a health insurer or a complicated financial institution.

What are the regulations for HSA contributions?

If you and your spouse each have HSA-qualified coverage, and you both plan on contributing to your HSAs, you must have separate accounts. This is true even if you’re both covered by the same HDHP. Additionally, whether you have single or family coverage affects the limits for HSAs.

For 2022, the self-only HSA contribution limit is $3,650, and the family contribution limit is $7,300. For 2023, the self-only coverage limit will increase to $3,850, and the annual family limit will increase to $7,750.

Maximum contribution limits are based on the calendar year, meaning allowable contributions are prorated by the number of months an individual is eligible to contribute to an HSA. For example, if an individual makes HSA contributions starting March 1 in 2022, their total contribution toward their HSA can’t exceed $3,042 that year ($3,650 ÷ 12 x 10).

You can make contributions at any point during the tax year through the federal income tax return due date, which is typically April 15.

The IRS treats married couples as a single tax unit, which means you must share one family HSA contribution limit of $7,300, or $7,750 in 2023. If you and your spouse have self-only coverage, you may each contribute up to $3,650, or $3,850 in 2023, annually into your separate accounts.

Depending on your family’s needs, you can decide if a family coverage plan or self-only coverage is best for your financial situation.

The IRS gives married couples three options for managing their HSA accounts, regardless of whether they have self-only coverage or a family plan:

  1. Split the family plan contribution evenly between the spouses.
  2. Allocate it unevenly, according to a specific division both parties have agreed on.
  3. Put 100% in one spouse’s account.

If you’re maintaining two HSAs with one spouse having a family plan and the other spouse with a self-only coverage plan, you can’t combine the annual contribution limits for a total of $10,950 (or $11,600 in 2023).

What are the advantages of having two separate HSAs?

While it may seem cumbersome to track contributions for two separate HSAs, it can be beneficial for maximizing your savings and covering more out-of-pocket medical expenses.

You and your spouse should especially consider two HSA accounts if one or both of you is at least 55 years old, or will be by the end of the year. This will make you eligible to contribute an additional $1,000 in catch-up contributions to your HSAs. But remember, you can't surpass the annual family maximum contribution limit, or you will be penalized.

If both of you have employers who provide HSA contributions, two HSAs will increase your overall savings. If both employers are contributing to your individual HSAs, you’ll receive more money combined than if just one of you had an HSA from your employer.

Also, once you’re 65, your HSA can be used to pay for non-qualified items without a penalty, making your HSA an important addition to your long-term retirement strategy.

What are excess HSA contributions and penalties?

If an individual or married couple exceeds the annual HSA contribution limit, they’ll be subject to a 6% excise penalty tax2. While excess contributions aren’t deductible, you can avoid the fee if you withdraw the excess contribution amount from the HSA before the tax deadline for that year.

Excess contributions could be used to pay for medical expenses, such as prescription eyeglasses, a year’s worth of contacts, or dental expenses, before the year is up. If you’ve gone over the HSA contribution limit and can’t use it for medical services, talk to your personal tax advisor for other options.

How can HRAs work alongside HSAs?

In some cases, couples may find themselves in a scenario in which one spouse has an HSA and other has an HRA, or health reimbursement arrangement (HRA). If that’s your case, there are ways you can leverage both.

For you or your spouse to use an HRA and HSA together, you’ll need to coordinate the two benefits compliantly. Luckily, this is possible with two popular HRA options—the qualified small employer HRA (QSEHRA) and the individual coverage HRA (ICHRA).

Let’s take a look at these two options below that your family can use to maximize your savings.

HSAs and the QSEHRA

If your employer offers a QSEHRA and you have an HSA, you’re in luck. Using an HSA and a QSEHRA together is a great way to maximize your tax-free compensation.

For a QSEHRA and an HSA to work together, the QSEHRA must be set up to reimburse individual plan premiums only. You can use your employer's monthly allowance to purchase your own HDHP and use the money from your HSA to pay for medical expenses that your HDHP doesn’t cover.

Using both health benefits to cover your health insurance premiums and out-of-pocket expenses creates a more comprehensive and flexible health benefit option for you and your family.

HSAs and the ICHRA

Similar to the QSEHRA, your employer must set up their ICHRA to reimburse your individual plan premiums only for you to be eligible to make contributions to your HSA. However, unlike the QSEHRA, you can opt-out of the ICHRA benefit altogether and choose only to use your HSA.

Additionally, because HSA funds don’t expire, you can choose not to utilize your HSA during the years you have an ICHRA, if you decide to opt-in to the benefit. That way, you can reap the benefits of growing your HSA funds and using them in the future.

Conclusion

HSAs have become increasingly popular in recent years for helping individuals and families pay for out-of-pocket expenses with personalized control. While there’s no such thing as a “joint” HSA, married couples can take advantage of the benefits HSAs offer by maintaining individual accounts.

By combining an HRA with their HSA, spouses can increase their savings and set themselves up for financial success. If you’d like to learn more about HRAs and how they can work alongside your HSA, PeopleKeep can help. Contact us and we’ll be happy to get you started.

This article was originally published on September 1, 2020. It was last updated on October 14, 2022.

1https://www.devenir.com/wp-content/uploads/2021-Midyear-Devenir-HSA-Research-Report-Executive-Summary.pdf

2https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2023-irs-contribution-limits-for-hsas-and-high-deductibel-health-plans.aspx

Originally published on October 14, 2022. Last updated October 14, 2022.
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