A question or two about HSAs (Health Savings Accounts)

Corporate HR has not been much help (as usual) so I thought I’d ask here, where someone might be able to give me a decent answer.

Here’s the situation: a couple of years ago, before my wife retired, she was on my health insurance (single+spouse, or family, something like that). Then she retired, and went on Medicare, and I changed my insurance coverage to Single.

My HSA debit card expires this month so they sent out new debit cards last month - one for me, and one for my wife. My wife hasn’t used the HSA card since she got her own insurance, and we were surprised that they sent her a new one. So, is there any reason for her name to still be on the HSA account? Should I have her taken off the account, or is it a sort of “no harm no foul” situation where she can’t use the account, but OK for her name to still be on it?

The other weird thing is that unlike our other credit and debit cards, our HSA cards have two different account numbers. Is that normal?

I can’t imagine it makes any difference at all if her name is on the account. All the IRS is looking at is who made the contributions.

She can’t contribute to an HSA once she’s on Medicare (and your contribution limits will have changed once you had single-only coverage), but you can continue to pay qualifying expenses for your tax dependents, including her, from that account. I’m not aware of any reason why she couldn’t have her own debit card to pay them herself.

Interesting… So, there might be some expenses that she could use the HSA card to pay for. I guess that makes sense – they encourage us to max out our HSA contributions every year, telling us that we can continue to use the account after retirement. I just kind of assumed that it was off-limits to her until I retired, then at that point we could both use it again.

The reason the question came up in the first place: my wife claims that ever since she has been on Medicare, she gets a letter at the beginning of every year from her insurance company claiming that she is covered under some other policy. And she has to call them and convince them that, no she’s not, before they will start paying on any of her claims. When the new HSA cards showed up in the mail, she somehow decided that her being on the HSA account was the “other coverage” that her insurance company was seeing. Which didn’t make sense to me, but to humor her I decided to try to get an answer from HR, which, as I stated above, got me nowhere.

On the credit/debit cards , is it an “account number” or a “member number” or “card number” that is the same? My husband and I each have credit cards on the same accounts and for some, the bills come with a single account number - but each card has a different number so our purchases are listed separately on the bill. I’ve had health insurance where everyone covered on the policy had their own card and number - even the kids when they were a few months old.

As far as I’m aware a HSA can be used on any dependents qualifying expenses. My family is covered under my wife’s employer insurance so I just list myself as single under my employers plan. My HSA can still be used to cover co-pays and things. It’s just a unique investment plan with some tax advantages.

Our cards have different numbers on them. Unlike our credit or debit cards, which have the same number on mine and hers. I guess I always thought of that as the “account number” but of course that doesn’t make sense. If your card is compromised they can send you a card with a new number, but your account number with the bank doesn’t change.

Sorry. Excuse me for my ignorance, but what exactly is a Health Savings Account? Thanks

A Health Savings Account is similar to a flex spending account, where you can have money deducted from your paycheck and put into an account to use for paying medical expenses. The difference is that whatever you put into a Flex Spending Account must be used by the end of the year or you lose it. With an HSA you can roll the balance over to the next year. HSAs are used with what they call “high deductible” insurance plans.

I have my wife and other dependents on a lot of different credit and debit cards (including HSA) and they all have a different number. As others have mentioned, just because you are no longer able to contribute to the HSA under the family limits, you can still pay qualified expenses for your dependents out of the funds. My children have never been on my HDHP but I pay some of their expenses out of my HSA. HSA is NOT “coverage.” Coverage would be the HDHP and whether she is still covered under that, which you have answered as no. The “having other coverage” thing can be a pain and came up for us from a time when my wife had some crappy job with a prescription discount plan that wasn’t even real insurance, and our insurance/pharmacy kept denying prescription due to “other coverage” from a temp job she quit 20 years ago - don’t ask me why that stuff happens.

Thanks. Is this something a person gets instead of health insurance?

No, they are usually combined with a high deductible (catastrophic) health insurance. The idea is that you can pay for more minor health costs and emergencies using pre-tax dollars. It’s hard otherwise to deduct healthcare costs.

The advantage being that the money in the HSA is not subject to federal income taxes.

Minor nitpick: some flex spending accounts allow carry over from year to year. Mine has a max of $500. At least that’s my guess, since I never have any left over.

Triple advantaged: the money being put in is not taxed. The money being withdrawn is not taxed (if used for medical expenses). The interest earned is not taxed.

There are FSAs for medical care and also FSAs for childcare, they’re treated separately, and highly employer-dependent.

I have an HSA and I have found it useful for dental expenses. I do not have dental insurance (and I am not convinced dental insurance really helps much).

Dental costs a lot so the HSA is a defacto discount on those costs.

I have health insurance and the HSA is there for the high deductibles.

If you (general “you”) have chronic problems and are in and out of the hospital a lot an HSA probably does not make sense. If you are reasonably healthy and only need health care on occasion then an HSA may make sense.

IANAExpert on this. Internet…I may be totally wrong. You’ll have to do your own due diligence on this.

Only certain types of plans are eligible to use an HSA, even if they have a high deductible. They must meet certain coverage requirements. I know this because I shop for my health plan on the ACA marketplace and not all of the high deductible plans qualify.

If you max out your 401k contributions, and wish you could contribute more, and you have an HSA plan, you can contribute to up to $3650 as an individual or $7300 for a family. These contributions are tax free and the earnings are tax free if used for qualified medical expenses. These accounts can be kept open indefinitely. My company’s HSA provider offers investments similar to our 401k plan.

I don’t intend to touch these funds until I’m retired when I expect to have more medical expenses. And if I don’t have medical expenses in the future these funds can be withdrawn and are taxed just like 401k distributions.

For 2023, the HSA maximum contribution is $3,850 if you’re on an employee only plan and $7,750 if you’re on a family plan with family being defined as employee + any dependent. If you’re 55 or older, you have an extras $1,000 maximum you can place in your HSA.

I have a decent number of employees who elect our health plan with the lowest premium even though it’s the worst one we offer. The network is extremely limited, to the point where I’ve gotten complaints because the employee comes to find out when they need a doctor they don’t have one nearby that is in-network. Many of these employees, the ones who don’t regularly see a doctor beyond their yearly checkup, would likely be better off with the high deductible plan. Even though the HDHP doesn’t have the lowest premiums, the company does make a generous contribution to the HSA and the funds roll over year after year. But like someone mentioned, if you frequently need to see a doctor, the HDHP might not be for you even if it comes with an HSA.

FYI, you can use your HSA for anything medical related like aspirin, bandages, condoms, blood pressure monitors, first aid kits, vitamins, etc. You can use your HSA card to buy eligible items on Amazon. Eligible items will be listed as such. The system won’t let you use the card on non-eligible items.

You typically can’t use HSA for vitamins (except maybe some considered necessary like prenatal).

First aid includes consumables like band aids but also stuff you can hope to never use like trauma kits and tourniquets.