Your Health Savings Account (HSA) can be used to pay for eligible healthcare expenses for you and your eligible dependents, including your spouse and children. It’s important to understand the definition of “eligible dependent” in the context of this account to make sure your claims are processed and you are reimbursed for your expenses quickly.
While federal laws allow for dependent children to be covered by an individual’s High Deductible Health Plan until age 26, tax laws for Health Savings Accounts are slightly different. According to the IRS definition, an eligible HSA dependent is a qualifying child (daughter, son, stepchild, sibling or step sibling, or any descendant of these) who meet these three criteria:
- Has the same principal place of abode as the covered employee for more than one-half of the taxable year, and
- Has not provided more than one-half of his or her own support during the taxable year, and
- Is not yet 19 (or, if a student, not yet 24) at the end of the tax year, or is permanently and totally disabled.
One way around this is for an adult child to set up their own HSA. As long as they are covered on the family qualified HDHP, adult children can contribute the full family HSA amount into their HSA account. The dependent’s contributions will not reduce the amount their parents can deposit into their accounts.
A domestic partner is not considered a spouse under federal law, so a domestic partner’s medical expenses cannot be reimbursed under your HSA unless the domestic partner is a “qualifying relative” of the participant. A qualifying spouse must be legally married.
A complete and more specific description of who qualifies as an eligible dependent is defined in Internal Revenue Code Section 152 (click link to read).