HSA Investing options

[sriki]

The 2015 HSA limits states that the maximum individual contribution is $3,350 & maximum family contribution is $6650. I have a couple of questions on what/who qualifies as a family.

1. I am on a high deductible health plan (HDHP) through my employer satisfying the annual deductibles and out of pocket expenses. My wife is covered by another insurance plan (copay). Would we still be able to contribute $6650?

Ans: I say NO

2. If the answer to 1 is NO, what if my wife is also covered by my insurance plan but only for a few months of a year? Would that allow us to contribute the full $6,650?


I found the following example of the IRS website. (http://www.irs.gov/publications/p969/ar02.html)

Erika, age 39, has self-only HDHP coverage on January 1, 2014. Erika changes to family HDHP coverage on November 1, 2014. Because Erika has family HDHP coverage on December 1, 2014, she contributes $6,550 for 2014. (last month rule)

Erika fails to be an eligible individual in March 2015. Because she did not remain an eligible individual during the testing period (December 1, 2014, through December 31, 2015), she must include in income the contribution made that would not have been made except for the last-month rule. Erika uses the worksheet in the Form 8889 instructions to determine this amount.

What if Erika remains eligible individual but changes from family HDHP to self-only HDHP? Would that satisfy the last month rule for the prior year or would she had to have family HDHP to be an eligible individual?


If not, is there any other way to maximize the HSA contributions if the husband is on a HDHP and wife is not (no kids)?

I have been putting away some money into my HSA for a while. Starting this year, I am planning to contribute the maximum. My HSA is adminsitered by the Bankcorp bank. I am trying to figure out its priceing strcuture and how best to utilize it.

The Bancorp Bank and National Financial Services are pleased to offer you a list of mutual funds with a trading fee of only $5.99 per trade! Click here to see the available list of funds.

What's the best way to buy into these available funds (haven't looked at the funds yet) considering there is a ~$6 fee on each trade?

 

[Matt]

Publication 969 covers this.

At this time, I am not sure about point 1. Though I do think that your point 2 is correct, they couldn't stop/start coverage without a clawback: http://www.irs.gov/publications/p969/ar02.html#en_US_2014_publink1000204049

Though that may be moot depending on point 1.... I get the feeling that you may be able to contribute the full amount of a family contribution but perhaps it would be titled to your name as owner. This chart implies that: https://hsa.umb.com/Employers/Contributions/Q025015

I'm absolutely not certain at this point, but I think we should dig deeper into the coverage (point 1) as it might be written off using logic, but allowed using the very illogical tax laws we have here.

For the funds - I'd be tempted to just buy one. Either all stock (balanced out via your external accounts) or go for a self contained fund, such as a target date/lifestyle. I've only glanced at it, but there are a ton of options, so once you pick your route from those two it would be easier to drill down via expense ratio.

 

[Matt]

@sriki the best I could find on this is that you could qualify for a family account if you had kids. May or may not be the best idea to cover them on HDHP based on age/estimated costs though. Otherwise I think you may have to run a single HSA.

 

[sriki]

@sriki the best I could find on this is that you could qualify for a family account if you had kids. May or may not be the best idea to cover them on HDHP based on age/estimated costs though. Otherwise I think you may have to run a single HSA.

Based on what I have read, I think I have to contribute as a single HSA. I was thinking that just having a spouse (independent of the plan they might be on) will be enough for the family contribution. I reached by single HSA contribution this month. I will stop that and divert those funds towards my 401k which could use this. That way I would be max'g both of them.

 

[haserfauld]

Pardon the thread hijack, but I've encountered an interesting dilemma that my HR director hasn't been able to answer yet. Hopefully someone with a bit more experience in the field might know.

Our open enrollment begins today, and for the first time, my company is offering an HDHP/HSA pairing. Previously, we only were offered an FSA. Back in December/January, I elected to contribute to my FSA for 2015 because, at the time, I did not know we'd have an HSA option this coming enrollment period. Because I have an FSA through the end of 2015, can I not set up the HSA this enrollment period? I have spent the funds in the FSA (negative spent), so I have payroll withholdings through the end of the year allocated to reconcile that account.

 

[Matt]

Pardon the thread hijack, but I've encountered an interesting dilemma that my HR director hasn't been able to answer yet. Hopefully someone with a bit more experience in the field might know.

Our open enrollment begins today, and for the first time, my company is offering an HDHP/HSA pairing. Previously, we only were offered an FSA. Back in December/January, I elected to contribute to my FSA for 2015 because, at the time, I did not know we'd have an HSA option this coming enrollment period. Because I have an FSA through the end of 2015, can I not set up the HSA this enrollment period? I have spent the funds in the FSA (negative spent), so I have payroll withholdings through the end of the year allocated to reconcile that account.

You probably cannot unless it is a special purpose FSA that integrates with the HSA, but you have until December for HR to get back to you on that, as you can fully load the HSA in a month if it is an option.

 

[haserfauld]

You probably cannot unless it is a special purpose FSA that integrates with the HSA, but you have until December for HR to get back to you on that, as you can fully load the HSA in a month if it is an option.

That's a good point. And it is not a special purpose FSA, as far as I know. It's a general/non-limited account. We're a smaller company, and HR is primarily one person. We're changing benefit providers, so it's doubtful that anything was set up to simplify integration. That's unfortunate, if it turns out I'm not eligible for 2015. I guess I could just push what I was planning to put in the HSA to my 401(k), since I'm not maxing that for the year. I'd love to get to the point of maxing out both, but our income/expenses/savings plan doesn't allow for that yet.

 

[haserfauld]

For anyone else in the same boat, the answer came back from the powers that be that I cannot open the HSA until 2016, although I can do it in January rather than my next enrollment date (June), which is kind of obvious. I hate missing out on contributions for 2015, but I won't be in a position to max out my 401(k) contributions for 2015 anyway, so it's not like I'm leaving tax-free potential on the table.