From the Hotline: HSA, Spouse, and Medicare Enrollment

Question: If an employee enrolled in our high deductible health plan (HDHP) becomes Medicare-eligible (based on age) and enrolls in Medicare, can the employee’s wife under age 65 open and contribute to a health savings account (HSA), assuming there is no other health coverage?

Answer: A taxpayer may contribute to a health savings account (HSA) if he or she meets all of the following eligibility criteria:

  • Has qualifying high deductible health plan (HDHP) coverage.
  • Does not have any disqualifying health coverage (called “impermissible non-HDHP coverage”).
  • Is not enrolled in Medicare.
  • Cannot be claimed as a dependent by another taxpayer.

Therefore, if the employee’s wife meets the above criteria, she may open an HSA in her name and make contributions to that HSA. The wife’s contributions may be made on a pretax basis if her employer offers a cafeteria plan with that option. If not, the wife can make HSA contributions on an after-tax basis and then take an above-the-line deduction for those contributions when she files her annual tax return.

For more information, see IRS Publication 969, Health Savings Accounts.