My family is on my wife's work insurance plan and we're funding the family HSA plan to nearly to its max. That money is invested in the market

At age 65, we can use the HSA funds for anything tax free.


My question is this

My wife is 9 years younger than me.

1. Does she have to be 65 to use those funds for non medical expenses since it's her works HSA family plan?

2. What if she dies at 64, and I'm 73. Will the plan go to me at which point I can use the funds for anything tax free since I'm well north of 65? Or will I have to pay taxes on all of to transfer it to me since it's under her work?

Goes to you under all of the same rules. It's essentially your HSA.

Since the HSA is in her name I believe you have to wait until she is 65 to use the money penalty free, but it will still be taxable income. Assuming you are signing up for Medicare part b and/or d at 65, she can take tax and penalty free withdrawals to cover the cost of the premiums on those services.

themissinglink said:

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So to clarify, at 65 you can start making distributions not associated with medical expenses and avoid the penalty, but it counts as ordinary income and you would be taxed on it. If used on medical expenses, tax-free.

If she dies before you, you would inherit it as the owner and the very same rules would apply to you as if it was your plan the entire time.

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Thanks, that sounds good to me

Correct me if I'm wrong, but you can use the monies to pay med expenses that may be multiple years old. Is that correct? My financial advisor has recommended we pay all of our medical expenses out of pocket (assuming we have the monies), but keep the receipts so we can pay ourselves back way later down the road if we want to avoid the taxes.

Yes that's how it works.