HSA: spousal coverage for part of year?

Question

I have an HSA. This year, my wife was under my insurance for the first

6 months, and then got separate coverage through her job. She has (qualified) out-of-pocket expenses during both periods.

- Can I use an HSA distribution to pay for her expenses during the time she was on my insurance? (I think pub 969 says no, because she would not be "an eligible individual during the testing period." This seems odd to me, so I suspect I'm misunderstanding it.)

- If that (above) IS allowed, can we do so for the time when she was not on my insurance? (I think, no.)

- Are there other issues with this?

- I'm reading pub 969, and the form 8889 instructions, and find them unclear on these issues. Is there a better reference?

Thanks, George

Alan · Accepted Answer

You are confusing the rules for how much you can contribute to an HSA with the rules for what is a tax-free distribution. You were an eligible individual all year.

For purposes of distributions, there are no tax issues as long as you use a distribution to pay for or get reimbursed for qualified medical expenses for either yourself, your spouse and your dependents. See the instructions for Line 15 of the 8889.

Mark Bole · Answer

A: Yes.Q: Will you have to pay tax (and possibly penalty) on the distribution?A: maybe.I'd ask first, what *were* her unreimbursed expenses during the time she was on your insurance, other than co-pays?  Are they qualified? etc.I'd further ask, if necessary, what was the nature of the HSA distribution? For example, withdrawal of excess contribution?Your state may have different rules for HSA's.-Mark Bole

HSA: spousal coverage for part of year?

Join the Discussion

Didn't find your answer?