Q. Is there some exception I’m not familiar with?
A. Yes. But, it's a someone minor exception. See #3 below. This is the same exception referred to, above, by DaniaelV01. Note that being on your insurance is not required. This is known as being a "medical dependent).
From IRS Publication 969: "Qualified medical expenses [for an HSA distribution] are those expenses that would generally qualify for the medical and dental expenses deduction" . "Qualified medical expenses are those incurred by the following persons.
1. You and your spouse.
2. All dependents you claim on your tax return.
3. Any person you could have claimed as a dependent on your return except that:
a. The person filed a joint return;
b. The person had gross income of $4,300 or more; or
c. You, or your spouse if filing jointly, could be claimed as a dependent on someone else’s 2020 return".
Note that just being on your insurance does not qualified as an exception.
https://www.irs.gov/pub/irs-pdf/p969.pdf (page 9)
