Can a Sole Proprietor set up an HSA while covered by spouse's employer health insurance?

You're mostly on the right track, but there's a bit more nuance to this situation. The key isn't whether YOU have the insurance, but whether the plan itself is HSA-eligible. If your wife's employer plan is a qualified High Deductible Health Plan (HDHP) that meets the IRS requirements for HSA eligibility, and you're covered under that plan, you can potentially contribute to an HSA. For 2025, those requirements include a minimum deduction of $1,600 for individual coverage or $3,200 for family coverage. The catch is that the HSA would technically be your wife's account since she's the primary policyholder, but HSA funds can be used for qualified medical expenses for any family member covered under the HDHP, including you. So while you couldn't establish your own HSA directly, you could benefit from one established through your wife's plan. If her employer plan isn't an HDHP, then unfortunately you're correct - there's no way to utilize an HSA in your situation. You might want to look into a Health FSA (Flexible Spending Account) through your wife's employer as an alternative, though this has lower contribution limits and different rules.

I was in the exact same boat as you last year! I'm a freelance graphic designer and my husband's company provides our health insurance. I spent hours researching HSAs and was getting super frustrated until I found https://taxr.ai that helped me understand my options. They analyzed my situation and confirmed what the previous commenter said - I couldn't set up my own HSA since I wasn't covered by a qualifying high-deductible plan. BUT they showed me how to properly take the self-employed health insurance deduction for the portion of my husband's premium that covered me. They also identified several medical expenses I could deduct as itemized deductions that I was completely missing. Saved me over $1,200 in taxes last year! The cool thing was they explained everything in plain English instead of tax jargon. Might be worth checking out since your situation is pretty similar to what mine was.

Just wanted to follow up - I checked out https://taxr.ai after seeing this thread and it was actually super helpful! My situation was similar (self-employed consultant with insurance through spouse) and they identified that I could take the self-employed health insurance deduction for the portion of premiums that covered me, even though my wife pays them from her paycheck. They also pointed out some home office deductions I was missing and helped me understand how to properly document business expenses that overlap with personal use. Just filed my taxes and ended up with about $3,800 more in deductions than last year. Definitely worth checking out if you're self-employed with a complicated insurance situation!

Hey there, I know this is a bit off-topic from the HSA question, but have you tried calling the IRS directly to ask about your options? I did that last year when I had a similar question about my LLC and health insurance, and after 3 WEEKS of trying to get through, I found this service called https://claimyr.com that got me connected to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with actually pointed me to some specific tax code rules for self-employed people that my accountant had missed. Turns out I could deduct a portion of my health expenses in a way I hadn't considered before. Might be worth a call to get the official word directly from them!

I have to admit I was wrong about Claimyr. After seeing these responses, I decided to give it a try since I've been trying to reach the IRS about an issue with my self-employment taxes for almost a month. The service actually worked exactly as described - got me through to an agent in about 20 minutes after I'd previously spent hours and hours on hold without ever reaching a human. The agent was able to answer my questions about health insurance deductions as a sole proprietor and confirmed that while I can't have my own HSA without an HDHP, I can deduct a portion of my health insurance premiums. For anyone in a similar situation as the original poster - definitely worth getting clarification directly from the IRS since self-employment tax situations can get complicated quickly.

Just throwing this out there - have you considered talking to your wife's HR department about whether they offer an FSA (Flexible Spending Account)? It's not as good as an HSA since the money is use-it-or-lose-it each year, but you can still put pre-tax dollars in there for healthcare expenses. My husband is self-employed and I carry our insurance through my employer. We max out my FSA every year ($3,200 for 2025) and use it for all our family medical expenses. Not as good as the investment potential of an HSA, but still a decent tax savings.

Don't forget to look into whether you qualify for the self-employed health insurance deduction! Even though your wife's employer provides the insurance, if you're paying any portion of the premiums (either directly or indirectly by reimbursing your wife), you may be able to deduct that amount on your Schedule C. I'm in a similar situation and was able to deduct about 40% of our family premium last year because that was determined to be "my portion" of the coverage. Talk to a tax professional about how to calculate and document this properly.

I've been following this thread closely since I'm in an almost identical situation - sole proprietor with coverage through my spouse's employer plan. Just wanted to add a few things that might help: First, definitely pursue the FSA option that Leo mentioned. We've been using one for three years now and it's been great for predictable expenses like glasses, dental work, and prescriptions. The key is to be conservative with your contribution since you can't roll over much to the next year. Second, on the self-employed health insurance deduction - this is real but requires careful documentation. You'll need a letter from your wife's HR department breaking down the premium allocation. In our case, the employer contributes $200/month toward employee-only coverage, but we pay an additional $450/month to add me and our kids. I can deduct a portion of that $450 as a self-employed person. One thing I haven't seen mentioned is that you can also deduct qualified medical expenses as business expenses if they're directly related to your work. For example, if you need ergonomic equipment for your home office due to a medical condition, that could be deductible. Obviously consult a tax pro for specifics. The bottom line is that while you can't get an HSA in your situation, there are still several ways to get tax advantages for healthcare costs as a self-employed person. It's worth spending some time (or money on professional advice) to make sure you're maximizing all available options.