How to optimize your HSA benefits in a dual-income household

by | Aug 1, 2021 | Taxes, Wealth Management

Being a part of a dual-income household is a bit of a catch-22. Yes, you have more money coming in for your family, but you also have more consumers in your family. Staying informed about changes to dual-income household tax and benefits regulations is essential. 

One or both of you and your partners’ employers may offer a Health Savings Account (HSA)—a fund you can use for medical expenses without being taxed. Money in HSAs can roll over from year to year, so you don’t have to worry about using it by a certain date. Once you are 65 years old, you can no longer contribute to your HSA, but you can still use any funds in it.

What Are The Benefits Of An HSA?

You receive three tax advantages if you have an HSA:

  • The money you put into your HSA is not included in your income in the eyes of the IRS. This makes your taxable income lower.
  • Money that remains in your HSA account is not taxed annually (or ever!)
  • You will not owe any tax on the money when you withdraw it to pay for eligible medical expenses.

How Do I Get An HSA?

Each year, the IRS determines who is eligible for HSA accounts. The IRS does so by deciding the maximum out-of-pocket figure and the minimum deductible a person can have in their health insurance plan in order to qualify for an HSA.

In 2021, the family contribution limit for an HSA is $7,200. This means that if your employer contributes $3000, the maximum you can contribute during that year is $4,200. If your employer doesn’t contribute to the HSA, you can add the max amount yourself. If you’re over 55 years old, you can contribute an additional $1,000 bringing your max contribution to $8,200. 

What If We Both Qualify For HSAs?

If one partner has self coverage and the other has coverage for self and dependents, but you both qualify for HSA accounts, know that a single account cannot have two names on it. If you both qualify, the IRS offers three choices:

  • You may allocate the total amount for both partners in one of your HSA accounts 
  • You may divide the family amount evenly among the two accounts
  • You may pick your own allocation for splitting it between the two accounts (i.e. one account has 40% of the money and the other has 60%)

If both partners have self-only coverage and there are no dependents, the IRS allows each partner to contribute up to $3,600 in a separate HSA account. This is a beneficial option if employers also contribute to HSA accounts, as the amount will increase.

Age is a factor in deciding how to handle HSAs in dual-income households as well. If you or your partner are at least 55 years old but not enrolled in Medicare, you can pay what’s called catch-up contributions. You’d want to keep separate HSA accounts if you fall into this demographic because your total amount of tax-free dollars available would increase. Up to $1,000 in catch-up contributions can be applied each year.

Beware Of Contributing Too Much Money To Your HSA

If you put too much money in your HSA and exceed the maximum amount the IRS has set for that year, you will be subject to a 6 percent tax. You will not be taxed if you take the money out of the account before April 15, however. Plan your spending wisely.

Document, Document, Document

The burden of proof is on you! Keep receipts so you can prove that you used HSA money for eligible expenses like medicine, copays or glasses.


An HSA can be a great financial decision for you and your family. To find out how to best optimize your HSA contribution, give us a call today.