Compliance Q&A: Maximizing HSA Catch-Up Contributions and Family Coverage: Understanding Childbirth as a Qualifying Event
- September 29, 2024
- Posted by: Gus Altuzarra
- Category: Compliance Q&A
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8.1.24 | HSA CATCH-UP CONTRIBUTION
Q. An employee and spouse are enrolled in an HSA qualified HDHP. Both are over 55 and they each want to participate in the catch-up contribution of $1,000. Can the employee contribute an additional $2,000 since both he and his wife are over 55? Or are they limited only $1,000?
A. If each spouse is over 55, they can each make a $1,000 catch-up contribution to their own HSA. One spouse cannot contribute $2,000 to their HSA on behalf of both spouses.
The catch-up limit, just like the regular HSA limits, are prorated based on the number of months an individual is enrolled in an HDHP. There is a special rule that allows you to avoid pro-rating the contribution if the individual is in the HDHP for the last month of the year and agrees to be in the HDHP for the entire following year. Absent this special rule, the catch-up limit must be pro-rated based on the number of months the individual has HDHP coverage.
A. If each spouse is over 55, they can each make a $1,000 catch-up contribution to their own HSA. One spouse cannot contribute $2,000 to their HSA on behalf of both spouses.
The catch-up limit, just like the regular HSA limits, are prorated based on the number of months an individual is enrolled in an HDHP. There is a special rule that allows you to avoid pro-rating the contribution if the individual is in the HDHP for the last month of the year and agrees to be in the HDHP for the entire following year. Absent this special rule, the catch-up limit must be pro-rated based on the number of months the individual has HDHP coverage.
2.15.24 | HSA CATCH-UP CONTRIBUTIONS FOR FAMILY COVERAGE
Q. If a family has two people both over age 55, can they each make a $1,000 catch-up contribution to an HSA?
A. Each spouse can contribute the $1,000 catch-up to their own HSA. It is important that each have an HSA. If just one spouse has an HSA, that spouse will be limited to the family contribution plus one $1,000 catch-up contribution.
1.11.24 | BIRTH OF A CHILD AS A QUALIFYING EVENT
Q. Upon the birth of a baby, can an employee enroll their new child, their spouse, and other dependent child in their company plan, and change the medical plan they are on?
A. It will depend on the terms of the employer’s cafeteria plan, but the law allows an employee to change the plan they are on upon the birth of a child, and can also enroll dependents, in addition to the baby, on the plan based on the birth of the baby. This is referred to as the “tag along” rule under Section 125 of the Internal Revenue Code.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
