30 sec brief
When the Affordable Care Act (2010), went into effect it included a provision that children be allowed to remain on their parent’s health insurance plan until the age of 26. This created a unique HSA provision that allowed those individuals to open an HSA (and contribute) as long as they are no longer a tax dependent. This is…
HSA Eligibility Requirements
- Individuals who are covered by their parent’s health plan
- Parent’s plan must be an HSA-eligible health plan, like a high deductible health plan (HDHP)
- Less than 26 years of age
- Cannot be claimed as dependent on anyone else’s taxes
- Has no other health insurance (other than parent’s health plan)
- Is not enrolled in Medicare
Not Required for HSA-Eligibility
- That the individual’s parents have an existing HSA or contribute to their HSA
- Parents can contribute to a family HSA at any contribution level, this will not affect the requirements above
Younger individuals who are eligible can contribute the 2018 HSA Family contributions limit of $6,900 (assuming of course that your parent’s health plan covers your parent and you). This is unique in that an individual can open a separate HSA (from their parent’s), but are still allowed to contribute the family maximum. This is an unprecedented HSA tax-savings opportunity.
What is important to note is that anyone can contribute to your HSA, which helps cast an even wider net to help young individuals save for health costs.
One Last Thing – Form 8889
As many young individuals are new to filing tax, and HSAs, please note that when filing taxes, a Form 8889 is required for every HSA account. You can read more, from the IRS, about Form 8889 here.
Note: none of the above information is intended to be tax advice. Lively does not provide tax advice so be sure to consult with a tax professional prior to making any decisions.