HSA with domestic partner

Submitted by aga1793 t3_z904wo in personalfinance

I recently added my domestic partner to my health insurance plan. Amongst us, we have no children or dependents.

I also have paycheck contributions for my HSA. My limit as an individual used to be $3650. After adding her to my health insurance as individual + spouse, the HSA allows me to contribute $7300.

A couple of questions:

  1. Am I legally allowed to contribute up to $7300 even though we are not married, but are living together as domestic partners?
  2. She is self employed. Can we both contribute up to $7300 in our separate HSA accounts?
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shadow_chance t1_iye8ey2 wrote

Yes to both but you can't use your HSA on her expenses and she can't use hers on any of your expenses like a married couple can.

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UberBostonDriver t1_iyee86a wrote

How do the HSA custodian or anyone validate this? Especially if the clam comes decades later or the HSA funds have long been transferred to other custodians that was never connected to your health insurance?

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shadow_chance t1_iyeke1j wrote

They don't. The IRS will if they ever audit you. Half our tax system is based on the honor system.

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AllTheyEatIsLettuce t1_iyf7rq9 wrote

They don't. And the IRS takes nothing but retroactive notice of rule adherence regarding this product in accordance with its overall audit rates.

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sciguyCO t1_iyea3oh wrote

>Am I legally allowed to contribute up to $7300 even though we are not married, but are living together as domestic partners?

Yes (though see my last paragraph below). The only criteria for allowing $7300 of contributions is that the owner of the HSA is covered by a "family" plan. What other individuals are being covered doesn't matter for purposes of determining your HSA contribution limit. It can be you + domestic partner, you + spouse, you as a single parent + child, whatever.

>She is self employed. Can we both contribute up to $7300 in our separate HSA accounts?

Oddly enough, yes, as long as each individual's HSA contribution stays under the $7300 limit. This is a quirky loophole around the HSA contribution limit rules, which also crops up in situations of parents with their adult (non-dependent) children covered by the same family insurance plan.

On your tax return, you would indicate whether you have individual or family coverage. If it's family, then your HSA contributions can go up to $7300. On your partner's separately filed tax return, they'd also indicate family coverage and also be allowed up to $7300 in contributions into their HSA.

This loophole closes for couples who file as married (either jointly or separately). That situation explicitly limits the couple to $7300 in total going into HSAs owned by either spouse, though AFAIK it doesn't matter which individual's HSA gets what share of that total.

As one last bit, technically your contribution limit gets pro-rated based on each month's HDHP coverage status. So if you switched coverage in the middle of 2022, you'd have some months that use the "individual HDHP" amount (1/12th of the $3650 individual max per month of coverage) and some as "family". You partner would have (I assume) some months of no HDHP coverage (so $0 added to the limit) + some months of "family" coverage. However, there's a "last month rule" exception to that, which you may want to check into to see if that can safely apply. If used, you each would use your coverage status as of December 1 2022 to determine your allowed 2022 max.

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aga1793 OP t1_iyeak1i wrote

Super helpful to know this when we decide to get married. Thank you very much!

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Werewolfdad t1_iye87dj wrote

>Am I legally allowed to contribute up to $7300 even though we are not married, but are living together as domestic partners?

If you are covered by a family plan, you are allowed to contribute $7300.

>She is self employed. Can we both contribute up to $7300 in our separate HSA accounts?

Yes, because you are both covered by family plans, not someone else's dependent, and not married

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