In Revenue Ruling 2005-25, the IRS clarifies the health savings account (HSA) eligibility
rules and contribution limits for married individuals. Under a strict reading of these
rules, a high-deductible health plan (HDHP) participant whose spouse has other non-
HDHP coverage may not contribute to an HSA, even if he or she is not covered by the
spouse’s non-HDHP. The new revenue ruling removes that barrier, allowing employees to
contribute to an HSA even if their spouse has a non-HDHP, as long as the employee is
excluded from coverage by the spouse’s plan. The ruling also indicates that the contribution
limits imposed by the married-couple rule do not apply to eligible employees who are not
covered under their spouse’s non-HDHP coverage, so these employees can make the maximum
annual contribution to their HSA.
The HSA statute allows “eligible individuals” to deduct their contributions to an HSA. The
law defines an eligible individual as someone who is covered under an HDHP on the first
day of the month and is not, while covered under the HDHP, “covered under any health
plan which is not a high deductible health plan, and which provides coverage for any
benefit which is covered under the high deductible health plan.” Exceptions include some
forms of insurance, such as dental and vision, and certain disregarded coverage such as
An employee whose spouse has non-HDHP coverage, including a health flexible spending
arrangement (FSA), is not eligible for an HSA if the spouse’s non-HDHP covers the employee.
For example, a wife may not contribute to an HSA if her husband has a health FSA through
his employer. The health FSA coverage is considered “other coverage” and disqualifies the
wife from contributing to an HSA, even if she does not seek or “disclaims” coverage under
her husband’s health FSA.
Under the HSA special rule for married individuals, if either spouse has family HDHP coverage,
then both spouses are treated as having only that family coverage. For example, if a
husband has self-only HDHP coverage and his wife has family HDHP coverage, both spouses
are considered to have family coverage. The contribution limit for family coverage is the
lesser of the HDHP’s annual deductible or $5,250 (for 2005). If both spouses have HSAs,
each spouse may contribute up to half the HSA limit to their respective HSAs, unless the
couple agrees to a different split.
If both spouses have family coverage, then the contribution limit is the lesser of $5,250 or
the lowest deductible. Again, if both spouses have HSAs, they must split the contribution
limit equally, unless they agree otherwise. The couple may not double the contribution limit
because they each have family coverage.
Additionally, the rules define family coverage as “any coverage other than self-only coverage.”
Tiered coverage, such as employee plus one or employee plus two, is considered family
Revenue Ruling 2005-25
What happens, however, when a wife’s family HDHP coverage does not cover her husband?
What happens when a husband’s non-HDHP coverage inadvertently covers his wife?
How is the special rule for married individuals applied in cases like these? Revenue ruling
2005-25 answers these questions.
HSA rules provide that an individual who is not covered by the spouse’s HDHP family
coverage is not considered to have family HDHP coverage. For example, if a husband has
HDHP family coverage and the wife has non-HDHP, self-only coverage, the husband is
eligible to contribute to an HSA. (The wife may not contribute to an HSA because she has
According to the ruling, a health FSA or other non-HDHP coverage can specifically exclude
an employee-spouse from coverage, thereby allowing an employee who otherwise meets HSA
requirements to contribute to an HSA. However, the ruling does not explain how to make
the exclusion official. Employees do not currently “enroll” their spouse and dependents in
an FSA. Informal comments from Treasury and IRS officials seem to indicate that employers
may need to include a coverage option allowing participants in non-HDHP plans to formally
exclude their spouse or other family members. Without such an option, an otherwise eligible
individual might inadvertently become ineligible for HSA participation due to automatic
coverage under the non-HDHP plan offered by the spouse’s employer.
The ruling also confirms that the contribution limits for individuals are based on whether
the HDHP provides self-only or family coverage. However, the ruling does not discuss what
happens if both spouses have family HDHP coverage under their respective employers’
plans that does not cover the other spouse. For example, suppose both spouses cover a
child under their respective employers' plans. Under a tiered plan, this coverage might be
called “employee plus one” coverage, but it is considered family coverage under the HSA
rules. Husband and wife each have family coverage but do not cover each other. Will the
special rule for married individuals apply?
The objective of the special rule for married couples is to eliminate “double dipping” for
married individuals (doubling up on the contribution limit). However, if each spouse has
family coverage that does not cover the other, may both spouses contribute the family limit?
Unfortunately, Revenue Ruling 2005-25 leaves this issue for future guidance to resolve.