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Adult children who are covered to age 26 under their parents’ high deductible health plans (HDHPs) may be eligible to start their own health savings accounts (HSAs) and make contributions. When spouses are covered by a family HDHP, the HSA contribution must be divided. But this rule doesn’t apply to adult children.
Adult children, who are HSA-eligible can contribute up to $7,750 to their HSAs for 2023 and $8,300 for 2024. Contributions to an adult child’s HSA can be made by the child or any other person on their behalf.
HSA Eligibility Rules
To be HSA eligible, the adult child can’t be claimed as a dependent on another person’s tax return. Also, they must:
- Be covered by an HDHP;
- Not be covered by other health coverage that is not an HDHP; and
- Not be enrolled in Medicare.
HSA Advantages
With HSAs, contributions are tax-deductible, interest and earnings accumulate on a tax-deferred basis, and withdrawals can be used to pay for qualifying medical expenses tax-free. Unused HSAs are not forfeited at the end of the year but rather rollover to be used for future qualified medical expenses.
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National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.
