Pros/Cons of individual HDHP HSA's versus family HDHP HSA?

Question

My wife and I deciding if we should keep individual HDHP with individual HSA's or be on the same HDHP and have one family HSA account.

The insurance plan basically doubles the deductible and out-of-pocket expenses of our individual single rates (i.e it combines them).

Is it better to keep individual accounts? The benefits I saw for individual accounts was the age 55 catch-up where we both could have the extra $1,000 contribution, and that employers can contribute to our accounts under a single HSA but not a combined account. This would seem to be the best reasons to stay on single HSA's. The one con would appear to be that we cannot use our own HSA accounts to pay for our spouse's expenses as they are not family plans. Is this true? Although not the main ask of this question, how would two single individuals go about unifying their HSA's if they wanted to?

Are there other pros or cons that I may want to consider in deciding individual or family HSA?

Answer 1

From my reading it looks like you're seeking some plain vanilla practical direction as it seems you generally have the nuances between the two down.

Most of what you have in your question is accurate, for some of the nuance.

• Employer HSA Contributions, Generally, when an employer establishes an HSA relationship they wouldn't make payroll deduction contributions to your personal HSA, you'd open a new account with the employer's chosen vendor. If your employer won't or can't make payroll deductions to an account of your choosing, you could theoretically set up a direct deposit to your individual HSA but you lose some of the tax benefit of a payroll deduction.

• Combining Existing Individual HSAs You can't combine HSAs. If you're employed somewhere that offers an HSA and you enroll in family coverage there, you can begin contributing the family limit to that HSA, I believe you can transfer your current individual HSA balance to the new employer HSA, but you'd have to check with the HSA bank. Your spouse's current individual HSA balance definitely could not be combined in to your employer HSA.

• Catch-up Contributions Say you have your family HSA, both you and your spouse have attained an age where you could make catch-up contributions, you would make the catch-up contribution to the family HSA, your spouse would establish an individual HSA to make the catch-up contribution there.

• Meeting Individual/Family Deductible/Out Of Pocket Thresholds The advantage of the "family" deductible and out of pocket maximums are typically only realized with there are three or more members on the plan. The way a typical HDHP works, once one member meets their specific deductible and/or out of pocket max all applicable costs from the other members are used to meet the "family" amounts, but check this against your actual policy to be sure. As such, there isn't a win as a two person family.

Personally it makes sense to me to keep a single pot of money to ease administration.

Answer 2

Three pros of having two individual accounts that I can see:

1) The total premium may be less. I can't speak for all plans, but in my plan the premiums for the family plan is a little over twice the premium for the individual plan. Probably not more than a few dollars difference, but something.

2) The max contribution to the HSA for 2018 is $3,450, but the family max is $6,850. Ok, so it's just $50 more you can contribute, and the family max is always roughly twice the single rate, it's still a small pro this year. (I'm pretty sure it's really a rounding effect -- back in 2016, the family HSA contribution max was higher)

3) With two plans, you're more likely to be able to hit the deductible and out-of-pocket max. For example, say the deductible for the single plan is $1500 and for the family plan is $3000 dollars. If one of you has $2500 in expenses and the other has none, you hit the deductible with single plans but not with a family plan. With just two of you, and the deductible and out-of-pocket max being twice in the family plan, the single plans will always be at least as good as the family plan.

#3 can be a pretty major advantage if one of you ends up having significantly more medical expenses than the other. If you're about the same, it doesn't make much difference.

Answer 3

In your particular case, go with separate HSA accounts, as it appears there is not a single "con". The only one you were worried about is also not an issue because you can use your HSA funds for your spouse (page 8). AFAIK it doesn't matter if your spouse has their own HSA too.