The Internal Revenue Service (IRS) has special rules regarding Health Savings Accounts (HSA) and how they should be managed. Those rules can be confusing—especially for married spouses who have more than one reimbursement account, or if they work for the same employer.

Here are some tips to help you better understand HSA rules.

Family Coverage vs Individual Coverage

When choosing a High Deductible Health Plan (HDHP) that qualifies for use with an HSA (qualified HDHP), remember that the IRS views Health Savings Accounts as individually owned, but your employees’ HSA funds can be used for their spouses and any other tax dependents—regardless of if they choose individual or family coverage.

In relation to HSAs, the type of qualified HDHP coverage (individual vs family) only determines the maximum contribution.

If both spouses are HSA-eligible and either has family-qualified HDHP coverage, their combined contribution limit is the annual statutory maximum amount for individuals with family-qualified HDHP coverage ($7,100 for 2020). This is true even if one spouse has family-qualified HDHP coverage and the other has self-only qualified HDHP coverage. The couple’s total HSA contributions still may not exceed the family maximum contribution limit.

Keep in mind that if either spouse has non-HDHP family coverage (such as an HMO, PPO, or non-qualified HDHP) that covers both spouses, they’re both ineligible to make contributions to an HSA. However, if one spouse has individual-only coverage under a traditional medical plan (such as a PPO), and the other has any coverage under a qualified HDHP (family or individual), the spouse with the qualified HDHP can still use HSA funds for eligible medical expenses for their spouse and tax dependents.

How It Works

Let’s look at one example: Annie has individual-only HMO coverage with her employer. Annie is not eligible to make HSA contributions. Annie’s spouse, Bob, participates in a qualified HDHP at work and enrolls in family coverage. Bob may contribute up to the family coverage maximum to his HSA, and may also use his HSA funds to pay Annie’s eligible medical expenses.

In this situation, the advantage of one spouse having family coverage is the ability to contribute the family maximum to the HSA. However, if one spouse has an individual-only non-HDHP coverage and there are no other tax dependents, it may not be financially beneficial to have a family plan since the premiums for the family qualified HDHP are higher than individual coverage.

Spouses Who Work for the Same Employer

If both an employee and his or her spouse work for the same employer, there are specific regulations about contributions that can get confusing. Under current rules, two spouses may not both contribute to a single HSA via payroll deduction. Since HSAs can be used to pay for eligible medical expenses for a spouse and dependents regardless of what type of qualified HDHP coverage they choose (family or individual), the spouses have a couple of options to consider:

  1.      Each spouse may individually open and contribute to their own HSA, or
  2.      Only one spouse opens an HSA, and only that spouse may contribute to the HSA.

Option two may seem less complicated, but it could prevent employees who work for the same employer from taking full advantage of employer contributions based on HSA participation. Many employers provide some HSA funding assistance, especially as employees build balances through payroll contributions. Ultimately, the employer decides its own policy, as long as the contributions meet IRS guidance requirements.

Also, it may be beneficial for each spouse to open an HSA to take advantage of any catch-up contributions if one of the spouses is 55 or older. Remember, though the HSAs are separate, you must still ensure that the combined yearly contributions for both spouses don’t exceed the annual family maximum.

How to Prevent HSA Rule Breaking

Many times, HSA rule breaking can be avoided by learning each family’s situation. During enrollments, ask the following questions to help raise red flags:

  1.      Does an employee or his or her spouse have family coverage for a qualified HDHP or another medical plan?
  2.      Does an employee or his or her spouse already have a HSA? How do they plan on contributing?

One of the ways American Fidelity can help you and your employees avoid these mistakes is by providing one-on-one benefit reviews during enrollment. During these reviews, our account managers will study and learn all of your benefit offerings—including medical, dental, and vision plans. This also provides an opportunity to ask eligibility questions, and potentially conduct a Dependent Verification Review. 

To learn more about how American Fidelity can help, visit

HSA contributions are not subject to federal income tax and most states income tax. State income tax may apply in California and New Jersey. Please consult a tax advisor for your state’s specific rules.


HSAs can be confusing, but we’re here to help. Learn more, here:

HSA Mistakes to Avoid: Dependent Rules

HSA Mistakes to Avoid: Reimbursement Accounts 


To learn more about how American Fidelity can help, contact your local account manager.