Author Topic: HSA contributions for tax-dependent daughter - can I use my HSA account?  (Read 686 times)

kms

  • Bristles
  • ***
  • Posts: 327
  • Location: Austin, TX
  • Minion Money Hippie
Our little family of three (me, my wife, and our 2-year old daughter) was covered under separate HSA-eligible high deductible health plans for the last two years. My wife and our daughter were covered by her employer-provided health plan while I had to purchase my own plan since I am self-employed and the employee + family options on her plan were abysmal. We both had our individual HSA accounts in our respective names, hers provided by her employer through HealthEquity and mine with Fidelity.

Next year, it looks like I will no longer be covered under an HSA-eligible health plan. The marketplace options for Texas are insulting, to say the least, the HSA options are few and far between, and I have thus had to purchase an off-marketplace health plan with a local non-profit health insurance provider. My wife and our daughter, on the other hand, will remain covered under the same HSA-eligible employer-provided health plan as before. Thus, we will be able to continue to contribute up to the full family maximum for 2021 as well given that we do have two individuals, wife plus tax-dependent daughter, covered by an HSA-eligible HDHP. So far, so good.

The question I have though is whether we are going to have to make our full family HSA contribution of up to $7,100 for 2021 into her HSA account or whether we will be able to split the amount in half as before and deposit 50% of the family maximum into my wife’s HSA account and the other 50% of the family maximum into my HSA account even though I am personally no longer covered under an HSA plan.

I found tons of information regarding using money from your HSA account to cover medical bills of tax-dependent children but nothing on what the rules on tax deduction and contributions are if one parent is no longer covered under an HSA plan while the rest of the family is.

kms

  • Bristles
  • ***
  • Posts: 327
  • Location: Austin, TX
  • Minion Money Hippie
Re: HSA contributions for tax-dependent daughter - can I use my HSA account?
« Reply #1 on: December 18, 2020, 01:53:56 PM »
Forgot one more thing, a follow-up question: would I be able to contribute into my own HSA account if I were covered under my wife's employer-provided healthplan as well or would we have to make our full family contribution into her HSA account?

bacchi

  • Walrus Stache
  • *******
  • Posts: 7056
Re: HSA contributions for tax-dependent daughter - can I use my HSA account?
« Reply #2 on: December 18, 2020, 02:17:23 PM »
Contributions are to an individual account. If you make a contribution, you'll receive a form 8889 from your HSA adminstrator. However, you're not allowed to make a contribution unless you're eligible and you're not eligible if you have non-HSA health insurance.

As your wife has the HSA qualified insurance and ONLY the HSA qualified insurance, the full family contribution must go into your wife's HSA plan.

https://www.irs.gov/publications/p969#en_US_2019_publink1000204025

Quote from: irs
Qualifying for an HSA

To be an eligible individual and qualify for an HSA, you must meet the following requirements.

    You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.

    You have no other health coverage except what is permitted under Other health coverage , later.

kms

  • Bristles
  • ***
  • Posts: 327
  • Location: Austin, TX
  • Minion Money Hippie
Re: HSA contributions for tax-dependent daughter - can I use my HSA account?
« Reply #3 on: December 18, 2020, 02:34:05 PM »
I see, thanks a lot. That would mean in return that if I were to jump on her HSA plan as well I would be able to make contributions into my HSA account and we would not have to make the full family contribution into hers, correct?

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 7254
  • Age: 39
  • Location: Seattle, WA
    • My blog
Re: HSA contributions for tax-dependent daughter - can I use my HSA account?
« Reply #4 on: December 18, 2020, 03:55:35 PM »
I see, thanks a lot. That would mean in return that if I were to jump on her HSA plan as well I would be able to make contributions into my HSA account and we would not have to make the full family contribution into hers, correct?

Correct. If both spouses are eligible for HSA contributions they can split the family limit between their two accounts in whatever ratio they choose.

kms

  • Bristles
  • ***
  • Posts: 327
  • Location: Austin, TX
  • Minion Money Hippie
Re: HSA contributions for tax-dependent daughter - can I use my HSA account?
« Reply #5 on: December 19, 2020, 07:17:03 PM »
Wonderful, thank you.