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How HSA Contribution Limits Work for Spouses

September 1, 2020
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As employers move away from group health insurance plans, more and more married couples have started to maintain separate individual health insurance coverage. And since many marketplace plans are health savings account (HSA)-eligible, those same couples can open HSAs for each spouse under certain conditions.

If you and your spouse each have insurance coverage that qualifies you for an HSA, 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 high-deductible health plan (HDHP). The IRS has specific rules for HSA contribution limits and how they work with spouses. There are penalties for exceeding your contribution limits, so it’s important to make sure you and your spouse know the rules.

The regulations for HSA contributions

For 2021, the self-only HSA contribution limit is $3,600 and the family contribution limit is $7,200.

For a married couple maintaining two HSAs—with one spouse having family coverage (for self + dependents) and the other with self-only coverage—you might assume they simply combine the contribution limits, for a total contribution ceiling of $10,800. This is not the case, however.

The IRS gives married couples three options:

  • Split the family contribution evenly between the spouses
  • Allocate it unevenly, according to a division both parties agree upon
  • Put 100 percent in one spouse’s account

In any case, the IRS treats married couples as a single tax unit, which means they must share one family HSA contribution limit of $7,200.

In cases where both spouses have self-only coverage, each spouse may contribute up to $3,600 each year in separate accounts.

Reasons for having two separate HSAs

While it might seem burdensome to track contributions for two separate HSAs, consider it if you meet the following criteria:

  • One or both spouses are over 55, as both will be eligible to add $1,000 in catch-up contributions.
  • One or both spouses have employers who contribute to their HSA, as this will increase the overall savings,

What to do about an excess contribution

If an individual or married couple exceeds the HSA contribution limit, they will be subject to a 6 percent excise tax. You can avoid this fee if you withdraw the excess contribution amount from the HSA before the tax deadline for that year. For example, if your plan allows it, you might want to get a new pair of prescription eyeglasses or a year’s supply of contacts. If you’ve gone over the contribution limit and cannot use it for medical expenses, talk to your tax advisor.

Conclusion

While there is no such thing as a “joint” HSA, married couples can take advantage of the benefits HSAs offer by maintaining individual accounts, particularly if they are eligible for catch-up contributions.

What questions do you have about HSA contribution limits? Let us know in the comments below.

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