Making Catch-Up Contributions to a Health Savings Account
The rules are different for HSAs and retirement accounts.
I read your column about making catch-up contributions to an IRA and 401(k), starting in the year you turn age 50. Can I also make catch-up contributions to my HSA?
Yes, although you have to wait until the year you turn 55 to begin catch-up contributions for an HSA. As long as you have an HSA-eligible health insurance policy (with a deductible in 2016 of at least $1,300 for self-only coverage or $2,600 for family coverage), you can contribute an extra $1,000 to your HSA, even if it is before your birthday.
In 2016, that means you can contribute up to $3,350 if you have self-only coverage, plus the $1,000 catch-up contribution, bringing your total contribution for the year to $4,350. If both you and your spouse are 55 or older and each has a separate HSA-eligible policy, then you can each contribute up to $4,350 to your own account.
If you have an HSA-eligible family health insurance policy and you’re 55 or older, you can contribute up to $6,750 in 2016, plus the $1,000 catch-up contribution, bringing your total contribution to $7,750 for the year. If you have a family policy and both you and your spouse are 55 or older (and have not yet signed up for Medicare), then both of you can contribute the extra $1,000.
But you can’t both make the catch-up contributions to the same account -- your spouse will have to open a separate HSA for his or her catch-up contributions. Each HSA is an individually owned trust account, similar to an IRA, and each catch-up contribution must be made separately to your own account, says Roy Ramthun, president of HSA Consulting Services. As long as you have a family health insurance policy, both spouses can open a separate HSA and contribute their own $1,000 catch-up contribution. You can split up the $6,750 in regular contributions however you’d like between the two accounts.
For example, one spouse could contribute $7,750 ($6,750 plus his or her $1,000 catch-up contribution) and the other could contribute $1,000, or each could contribute $4,375 to his or her own account, says Ramthun.
You can use the money from either spouse’s HSA tax-free to pay for eligible medical expenses for yourself, your spouse and your current tax dependents.
The contribution rules become more complicated if you did not have an HSA-eligible health insurance policy for the full year. If you are not HSA-eligible for any part of the year, you will have to prorate your contributions, including your catch-up contributions, says Ramthun. See How Much You Can Stash in a Health Savings Account for more information about the midyear eligibility rules, including the special rule if you had eligible coverage in December.