Congratulations! You’re getting married and about to embark on a lifetime of wedded bliss. Now what to do about your Health Savings Account (HSA) and health insurance? Admittedly, these topics are not as fun as making your playlist, but they are really important to laying your financial foundation as a couple.

There are a few different ways getting married can affect your HSA. They won’t all apply to you, as you and your fiance will have to assess the health insurance and savings options that make sense for you.

Change 1: You can change to family health insurance coverage

The first change that could affect your HSA is a change in your health insurance. To qualify to contribute to your HSA you must be enrolled in a High Deductible Health Plan (HDHP) and that must be your only insurance. Once you’re married, an HDHP may or may not make sense for you. So you’ll have to consider the following options carefully:

1. If you had an individual HDHP before you got married, after you marry, you can purchase a family HDHP.

2. If you had a family HDHP before you got married, you can add your spouse to your current plan.

3. If you had health insurance coverage other than an HDHP (and were simply using your HSA for qualified medical expenses and not contributing to it), numbers 1 & 2 still apply to your traditional health plans.

4. If you had traditional health insurance prior to getting married, you can switch to an HDHP family plan and start contributing to your HSA again.

The best news is that you don’t have to wait for open enrollment to make your desired changes because marriage is considered a qualifying event.

Change 2: Your annual contribution limit might increase under new rules

If you had an individual HDHP before getting married and you and your spouse choose to buy a family HDHP, your annual HSA contribution limit will increase to the annual family contribution limit. As long as you buy your family plan by December 1 of that year, you’re eligible to contribute the maximum amount to your HSA.

If you had a family HDHP before getting married, or you choose to maintain your individual HDHP, your annual contribution limit stays the same.

It’s important to note that your annual maximum contribution amount includes all contributions to your HSA. That means if your employer contributes to your HSA, you’ll need to factor that into your savings budget.

Change 3: You could be eligible for a catch-up contribution

If you’re not yet 50, but your spouse is, and you purchase a family HDHP, you are eligible to contribute an additional $1,000 per year, which is referred to as a "catch-up contirbution."

Change 4: Your income taxes may change

Since your HSA contributions are free of federal income tax, buying a family HDHP and increasing your HSA contributions could result in lower taxes. Especially if said contributions drop your taxable income into a lower tax bracket. Here’s an example:

Your Taxable Income as a Couple (excluding HSA contributions): $88,250

• Your tax rate without HSA contributions is: 22%

• Your annual federal income tax bill: $19,415

• Your annual contribution amount: $7,200

• Your new Taxable Income as a Couple: $81,050

• Your tax rate with HSA contributions is: 12%

• Your federal income tax bill: 9,726

That’s a savings of almost $10,000 just by maxing out your contributions to your HSA.

You can bequeath your HSA to your spouse when you die and it remains an HSA

An HSA can function like a retirement account in that once you turn 65, you can start taking withdrawals for general living expenses without paying a penalty. You’ll pay income taxes on those withdrawals but any money you use for qualified medical expenses remains tax-free.

In addition, you can leave your HSA to your spouse when you die and they will enjoy those same benefits.

If you leave your HSA to someone who isn’t your spouse, your account ceases to be an HSA and the beneficiary will be taxed on the entire balance.

Should You Change Your Health Insurance?

To answer that, you and your spouse will have to look at the available options and make the best decision for your family. Factors to consider when making that decision are:

1. Does your spouse have employer-sponsored health benefits? If so, what’s the monthly cost? Is the coverage adequate for their/your family’s needs?

2. If you have an HDHP, does the cost and coverage meet your/your family’s needs?

3. If your spouse has traditional health insurance and you have an HDHP, does it make more financial sense to buy a family plan under one or the other?

4. If you change to a family HDHP, can you afford to max out the annual contribution limit?

You can use Your HSA to pay for your family's qualified medical expenses

If you choose a health insurance scheme other than a family HDHP, you can still use your HSA money to pay for qualified medical expenses for your spouse and your dependents. Your spouse can also contribute money to your HSA. You’ll just be constrained to a the maximum annual individual hsa contribution limit.

If your HSA issues debit cards linked to your account, your spouse is also eligible to receive their own so they can pay for their qualified medical expenses at the point of sale.

Getting married is an exciting time and there is much to look forward to, including sharing resources. To determine how you can make your HSA best work for you and your family, consider the changes that are possible and which will most improve your family’s situation.

If you want to learn more or sign up for an HSA, reach out to us at Lively.