Making Catch-Up Contributions to a Health Savings Account

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.

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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.

For more information about HSAs, see FAQs About Health Savings Accounts. Also see IRS Publication 969, Health Savings Accounts.