The intersection of Medicare and HSAs is a confusing area and I get these questions a lot. I can address definitively from the HSA account perspective, but cannot speak to certain aspects of how every cafeteria plan works when contributing to an employees spouse. It is my understanding that it is possible in certain cases, but the contribution would be in after tax dollars, but could then be deposited for a tax deduction when she files her tax return, but I would suggest running those questions by a benefit lawyer.
From and HSA account perspective, this situation is very clear. HSA eligibility is determined on an individual level. One must be enrolled in an HSA-qualified health plan and not covered by any other plan that can pay out of pocket expenses under the deductible in order to be eligible to contribute to an HSA account.
In the case of your employee, once he accepted any part ofMedicarecoverage, he is no longer eligible to contribute to his HSA account for the rest of his life. For instance, if he was covered by Medicare for three months in 2015, his eligibility is limited to 9/12ths of his normal family total for 2015, as long as he was otherwise eligible for the first nine months. He still has until 4/15/16 to make a prior year contribution for the 2015 tax year, but cannot make any contributions to his own HSA in 2016 or beyond.
His wife, however, is not affected in any way by her husbands Medicare enrollment, since Medicare coverage is single coverage. As long as she remains covered by HSA-qualified coverage, even if she is not the primary insured, she may make contributions to her own HSA. If that HSA plan covers more than one person, even her husband who also carries Medicare coverage, she can contribute at the family level. Anyone can contribute to her account, including her husband, her employer, her husbands employer, or a total stranger who wants to give her money. All the tax benefit for contributions to her account go to her. She is free to accept pre-tax contributions through her employer or to send after-tax contributions directly to her HSA Trustee and take a tax deduction, as long as the total of contributions to her account(s) do not exceed the family HSA contribution limit for that tax year.
I cannot speak to legality or the tax treatment for her husband when you run contributions to her account through his cafeteria plan. It may affect comparability or non-discrimination rules. This is where I suggest that you consult your benefits lawyer to understand how these things apply to your specific plan document structure.