HSA Limits

[S T]

HSA Question

Tax Planning and Medical Insurance change in 2009

Sole Proprietor – Schedule C obtaining Group Insurance Coverage. Under the Group Insurance, the husband can obtain coverage for himself and his 2 children, and the spouse can also obtain coverage as an employee. The way the medical plan would be written assists in reducing the medical insurance premiums, as the spouse is younger.

The question relates to HSA Contributions - if they both elect an HSA plan for 2009, both under Age 55 – the HSA deduction is $5,950 under Family Coverage , correct? Since as married they need their own separate HSA accounts, they can contribute as much as they want to the maximum single limit ($3,000), however, not to exceed the $5,950?

There is not an extra HSA contribution amount due to the two separate coverages under the Group Plan.

I am looking at TTB – page 13-29 as well as the Pub 969 page 6

Thanks in advance for any info

Sandy

[Bees Knees]

TTB, page 13-1 under limits has a footnote at the bottom that says: "Assumes only one spouse has an HSA. See IRS Pub 969 if both spouses have separate HSAs."

The WebCD link on Pub 969 takes you to page 6 of Pub 969 which says:

Rules for married people. If either spouse has family
HDHP coverage, both spouses are treated as having fam-
ily HDHP coverage. If each spouse has family coverage under
a separate plan, the contribution limit for 2008 is
$5,800. You must reduce the limit on contributions, before
taking into account any additional contributions, by the
amount contributed to both spouse’s Archer MSAs. After
that reduction, the contribution limit is split equally between
the spouses unless you agree on a different division.

The rules for married people apply only if both
spouses are eligible individuals.

If both spouses are 55 or older and not enrolled in
Medicare, each spouse’s contribution limit is increased by
the additional contribution. If both spouses meet the age requirement,
the total contributions under family coverage
cannot be more than $7,600. Each spouse must make the additional
contribution to his or her own HSA.

Example. For 2008, Mr. Auburn and his wife are both
eligible individuals. They each have family coverage under
separate HDHPs. Mr. Auburn is 58 years old and Mrs.
Auburn is 53. Mr. and Mrs. Auburn can split the family
contribution limit ($5,800) equally or they can agree on a
different division. If they split it equally, Mr. Auburn can
contribute $3,800 to an HSA (one-half the maximum contri-
bution for family coverage ($2,900) + $900 additional contribution)
and Mrs. Auburn can contribute $2,900 to an
HSA.

Keep in mind we are talking about whether or not each spouse has separate HSAs. If only one spouse has an HSA (even though both spouses are covered under a family health insurance plan), then you use the limits listed in TTB page 13-1. It is only when each spouse has a separate HSA that you have to follow IRS Pub 969 rules for married people. Keep in mind an HSA is like an IRA. You cannot own joint HSAs. Each spouse has to own a separate HSA if you want both to make contributions.