Health Savings Accounts (HSAs) are a great way to handle health care coverage for many people. In order to have one you need to have a specific type of health plan, referred to as a Qualified High Deductible Health Plan (HDHP). In order to qualify as an HSA eligible HDHP in 2008, plans for a single individual must have a the deductible of at least $1100 and the only benefits available prior to meeting the deductible are preventive services. For a family plan the minimum deductible in 2008 is $2200.
But the question I want to address in this article is one aspect of setting up the actual HSA. When a family has an HSA eligible plan, should they set up one HSA or two? Well, when you set up an HSA for your family there can only be one account holder listed, but the money in the account can be used for all members covered by their family health plan. In 2008 the maximum contribution for an individual is $2900 and for a family is $5800. So, no big difference at this point whether you need one account or two? Maybe if you file your taxes separately, you could each use the deduction of what you’ve contributed during the year.
Here’s where the potential benefit comes in; after age 55, people with HSAs are eligible for ‘catch up’ contributions! In 2008, that would be an additional $900. If you have one account, there can only be one catch up contribution. But if you and your spouse have separate accounts, you could both take advantage of the catch up contribution. So,with a family HSA allowable contribution of $5800 (if you choose to make the maximum contribution) plus $900, that would give you $6300 in the account. With separate accounts you could each make the maximum contribution of $2900, plus $900, times 2, giving you a total of $7200 that you could put away. Something to think about!
Every year these numbers are adjusted for the coming year; see below for the HSA numbers for 2009:
- Maximum HSA contribution–individuals $3000, families $5950
- Catch up contributions for account holders over age 55–$1000
- Minimum health plan deductible–individuals $1150, families $2300
- Maximum out of pocket max on a plan–individual plans $5800, family plans $11,600
Whatever you do, you need to have health insurance these days. HSA eligible plans can be less expensive than conventional PPO plans and you are basically are ‘self insuring’ for the smaller issues. Look at it further to see if it’s a fit for you.
Be well!
Tags: Group Health Insurance · Health insurance · HSAs · Individual Health Insurance6 Comments
6 responses so far ↓
Honestly, as you hear stories about waste and government bloat, it kills me of another 16,000 people being put into government jobs, cubical space, benefits, buildings to house them. I know there have to be some really good employees out there, but man, I think the cost will be astronomical.
HI Keith,
Thanks for your question, sorry to be slow in responding–busy times!
I would consult your tax person for the best way to handle this. I’ve always been told that an HSA is held in one person’s name, so you and your wife theoretically couldn’t be named on one account. Another thing to consider is your age. If you are over 55, and have separate accounts, you could EACH have a $1000 ‘make up’ contribution on top of what is normally allowed.
Something else to look at, depending on how much you want to put away, is if you have two accounts, your account could hold up to the allowed amount for an individual ($3050 in 2010) and your wife’s account up to the family max ($6150 for 2010). As far as distributions, keep all receipts that you use HSA money for as you can potentially be audited at any time. That right there should answer the ‘who was it spent on’ issue.
So I’m not sure if I answered this sufficiently, but I hope it’s a start. There are so may things to consider, I’d definitely talk to your tax person.
Colleen,
My wife and I have separate HSA eligible health plans. Mine covers only me, while hers covers her and the kids. I was about to open two separate HSA savings accounts but the banker said we could share an account. If we share an account, can we spend the money unequally across all the family members, regardless of who’s plan they were covered under?
Also, when it comes to filing taxes, it would be easy enough to separate the contributions (form 8889), but what about the distributions? Would I need to track them by who they were spent on? or is one big bucket once it’s contributed?
I hope this is clear.
Thank-you for your help!
Keith
H Katy,
This has been kicked around and it’s a little difficult to get clarity in the IRS publications, at least the last time I looked. Generally it is one family plan, one HSA and it has to be noted that the account can only have a single name on it; it can’t be a joint account, but it can be used by all members.
That is probably going to be another area where there will be changes over time, as each year something is modified. These are still relatively new having only been around since 2004.
Thanks for your note!
I thought that the policy holder had to have the HSA and so if you have a family HDHP, you could only have 1 HSA with the family deductible level. Not true?
[...] King covers the question of whether married couples should open one Health Savings Account or two. the question I want to address in this article is one aspect of setting up the actual HSA. When a [...]