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 an incredible opportunity for young individuals to create a long-term health savings vehicle that you can use or invest for their entire lives.
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 (but 18 years of age or older)
- Cannot be claimed as dependent on anyone else’s taxes
- Has no HSA-disqualifying 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
HSA Opportunity
Younger individuals who are eligible can contribute the current year family contributions limit (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.
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