Joint Accounts: The Pros and Cons of Sharing Money with Your Spouse

I will discuss the most common scenarios for using joint accounts when married or in a domestic partnership, so that you can save money and avoid problems with the IRS.

Cropped shot of an affectionate young couple going through paperwork at homegetty
The Pros and Cons of Sharing Money with Your Spouse.

There are a few things to consider when trying to decide whether an HSA or an FSA is right for you and your family. In my previous post, I went over some of the basics of each type of account and how to choose between the two based on your needs and personal financial situation. In this post, I’ll explore the most common scenarios for using these accounts when married or in a domestic partnership so that you can maximize savings and stay in the good graces of the IRS.

If one spouse or partner has an HSA-ineligible plan, they will not be able to take advantage of the benefits of an HSA. This could mean higher out-of-pocket costs and less flexibility in how they use their health care dollars.

If you are enrolled in an HDHP, you can contribute to an HSA, even if your spouse/partner is covered by a non-HDHP family plan. You would be eligible to contribute up to the 2022 IRS single coverage HSA limit of $3,650 inclusive of any employer contributions.

There is an important caveat to be aware of regarding the FSA and HSA accounts. According to IRS rules, a healthcare FSA is considered an additional medical plan. As a result, to remain HSA-qualified and contribute to the account, you or your spouse cannot have a general-purpose FSA. This is something to be aware of when considering which type of account to contribute to.

A limited-purpose FSA can be a great way to help cover dental and vision expenses, but it's important to remember that unlike an HSA, the FSA has a use it or lose it rule. Be sure to check with your plan provider to see if any amount can be rolled over from year to year so you can plan accordingly and not leave any money behind.

Yes, you can use your HSA funds to pay for your spouse’s or domestic partner’s medical expenses.

The IRS's regulations on tax-free distributions from healthcare spending accounts are unfair and outdated. Only reimbursing expenses for oneself, one's spouse, and one's tax dependents is unreasonable in today's world. Domestic partners and ex-spouses should also be able to receive tax-free distributions for qualified expenses, as long as they are not the tax dependent of the account holder. This would bring the IRS's regulations in line with modern family structures and provide much-needed relief to families struggling to pay for healthcare.

As of now, you cannot use an FSA to pay for your spouse or domestic partner. However, this may change in the future as the rules regarding FSAs are always subject to change.

This paragraph discusses the requirements for using a healthcare FSA to pay for your spouse's eligible healthcare expenses. According to the IRS, you must be legally married to use your healthcare FSA in this way. This means that a domestic partner would not qualify for reimbursement.

It is unclear whether or not you can reimburse a domestic partner's or ex-spouse's eligible expenses with qualified HSA dollars. However, it is worth noting that the IRS has not issued any guidance on this matter. Therefore, it is advisable to speak with a tax professional to determine if this is an option for you.

As more and more Americans become covered by high-deductible health plans, health savings accounts (HSAs) are becoming an increasingly popular way to save for healthcare expenses. If you have a domestic partner or ex-spouse who is covered by your medical plan but does not have any other disqualifying coverage, they may be eligible to open an HSA. Contributions to an HSA are tax-deductible, and distributions can be taken tax-free to reimburse eligible healthcare expenses. This can be a great way to help your domestic partner or ex-spouse cover their healthcare costs, while also getting a tax break yourself.

There is still some ambiguity surrounding the contribution limit for domestic partners, ex-spouses and children who are no longer a parent's tax dependent. Some tax advisors have taken the position that each unmarried adult can deposit up to the family limit in each respective account, while others advise splitting the limit between the two adults. It is always best to seek the counsel of a qualified tax professional for formal advice on your specific situation.

There are a few different scenarios in which it might make sense for married couples to open separate HSA accounts. One scenario is if each spouse has a different health insurance plan. Another scenario is if one spouse has a high deductible health plan and the other spouse has a lower deductible plan.

This paragraph provides information about the IRS catch-up provision for married couples aged 55 or older. Under this provision, each spouse is allowed to contribute an additional $1,000 to their health savings account (HSA), for a total of $7,300 in 2022. This can be a great way to save for healthcare expenses in retirement. In addition, if both spouses have access to a high-deductible health plan (HDHP) at their respective employers, it may be more economical to sign up for separate individual coverage, as premiums are typically lower that way. This can allow married couples to take advantage of employer HSA contributions, which have become increasingly common.

Yes, you can use HSA dollars to pay for eligible expenses incurred by your adult child who is no longer your tax dependent.

As a covered adult child, you can open your own HSA account once you are no longer a dependent. If you are covered under your family's plan, you can contribute up to the family maximum ($7,300 for 2022) in your own HSA. This can be a great way for your parents to help you pay for your expenses and encourage you to save over the long term.

Yes, you can use your FSA dollars to cover eligible expenses incurred by your adult child who is no longer your tax dependent. This includes expenses for medical care, dental care, and vision care.

I believe that children should be covered by their parents' medical plans until they turn 26. I think this is a great way to help young adults transition into adulthood and to make sure they have access to quality medical care. I also believe that this coverage should extend to adult children who are no longer tax dependents, as they may still incur eligible medical expenses. This coverage would provide peace of mind to families and help ensure that everyone has access to quality medical care.

In summary, this is an excellent article that provides a clear overview of the situation.

HSAs and FSAs can be great resources to save money, but it's important to review your options carefully and consult with a financial professional if needed. Your employer might offer access to a financial planner as part of your financial wellness benefit, which can be helpful in making the best decision for your situation.