To be eligible for an HSA, you must meet the following requirements, as defined by the IRS:
- You must be covered under a qualifying high-deductible health plan (HDHP) on the first day of the month.
- You have no other health coverage except what is permitted by the IRS.
- You are not enrolled in Medicare, TRICARE or TRICARE for Life.
- You can’t be claimed as a dependent on someone else’s tax return.
- You haven’t received Veterans Affairs (VA) benefits within the past three months, except for preventive care. If you have a disability rating from the VA, this exclusion doesn’t apply.
- You do not have a health care flexible spending account (FSA) or health reimbursement account (HRA). Alternative plan designs, such as a limited-purpose FSA or HRA, might be permitted.
Other restrictions and exceptions may also apply. We recommend that you consult a tax, legal or financial advisor to discuss your personal circumstances.
What’s a high-deductible health plan?
The IRS defines a qualifying high-deductible health plan as having:
- A minimum annual deductible of $1,350 individual/$2,700 family
- An out-of-pocket maximum of $6,750 individual/$13,500 family
- A minimum annual deductible of $1,400 individual/$2,800 family
- An out-of-pocket maximum of $6,900 individual/$13,800 family
Coverage of adult children
Health care reform legislation passed in 2010 allows adult children up to age 26 to be covered by parents’ health plans, including high-deductible plans.
The tax laws regarding HSAs have not changed, however an adult child must still be considered a tax dependent in order for his or her medical expenses to qualify for payment or reimbursement from a parent’s HSA.
If you are under age 26 and covered by a parent’s HSA-eligible, high-deductible health plan, you may be able to open and fund an HSA yourself and can contribute up to the IRS family maximum. The criteria above still apply. Consult a knowledgeable benefits consultant or tax advisor.