I’m on Medicare. Can I be covered by my husband’s HSA?

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Q. My husband has a high-deductible health plan through his employer and it’s tied to a health savings account (HSA). I’m on his plan and on Medicare A since his plan is qualified for me to avoid signing up for Medicare B. I’m 67 and he’s 28. We have no children. The Target plan is primary and Medicare A is secondary. He;s being told his maximum HSA contribution allowed is $3,650, but aren’t we considered a “family” despite having no children and thus allowed to contribute up to $7,300? I don’t want to risk penalties for contributing too much this year.
— Married

A. It’s a great question.

As you know, health savings accounts (HSAs) can be a great way to save on medical expenses.

Let’s go over how it all works.

The HSA allows the owner to put money aside on a pre-tax basis to pay for qualified medical expenses such as deductibles, co-payments and coinsurance, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

It requires that the individual who owns the plan have a High Deductible Health plan (HDHP) that is labeled “HSA-eligible” in order to make an annual contribution, she said.

As you noted, for 2022, the maximum contribution to an HSA is $3,650 for an individual and $7,300 for a family. For those age 55 and older, an additional $1,000 catch up contribution may also be made.

“When an individual enrolls in Medicare — Part A and/or Part B — the ability to contribute to their own HSA ends,” she said. “However, when primary insurance for someone enrolled in Medicare Part A is being provided by a spouse’s HSA-eligible plan, the spouse may contribute up to the IRS maximum for a family each year.”

Your husband should get in touch with the bank that holds the HSA to determine why his account is indicating that he is only able to make an individual contribution, and he should speak to his employer’s benefits expert, too.

You mentioned concerns about an excess contribution, and you should be.

“An excess contribution occurs when an individual puts away more pre-tax dollars than are allowed by the IRS,” Mott said. “The IRS penalty is generally 6% of the amount above the contribution limit and is assessed annually until the excess amount is removed.”

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This story was originally published on Nov. 15, 2022.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.