Can I pay medical expenses for my 19 yr old who is not a student using my HSA?

[crimsondryad]

Whew, children becoming adults is a huge life event! My daughter is 19 and not attending college.  It seems I cannot claim her as a dependent as my child (over 19) or as a qualifying relative (she makes more than $4k a year).  Per those rules it seems like I cannot use my HSA to pay for her medical expenses even if she is on my health insurance.  Is that true? 

I provide 100% of her housing, gave her a car, pay for all of her food, medical expenses, utilities, and cell phone.

[Katie-P · Accepted solution]

Hi @crimsondryad !

Thanks for this great question. I'd be happy to offer some hopefully good news!

Even though your daughter is not eligible to be your dependent due to her income, you may still be able to use your HSA on her qualified medical expenses. As long as you provided more than half of her financial support, you may use your HSA on her.

IRS Publication 969 attests to this. Reference page 9.

Per the IRS: 

"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 $4,400 or more; or

c. You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2022 return."

As I stated above, if you provided more than half of your daughter's financial support, then the only reason you are not claiming your daughter as your dependent is because she possibly made over $4,400 in 2022 ($4,700 in 2023). Therefore, you would be eligible to use your HSA on her. Again, the key is whether or not you paid over half of her financial support.

I hope this information is helpful, @crimsondryad! I'll stay tuned in case you have a follow-up question. Thanks again!

[JandKit]

Hi Crimsondryad!

Thank you for this very timely question! Let me add my info along with others that may join this thread.

THe HSA is similar in many respects to an IRA. By that, Any person who has income can purchase this

                                                           High Deductible HEALTH SAVINGS ACCOUNT

That is the rub! There, accordingly, are two types of HSAs, Individual and the Family Plan.  The cost is $3750 for Individual and $7500 for the family plan. The contributions to either plan are considered tax-free as long as they are used for medical use.

The IRS has clarified that you can withdraw tax-free money from the HSA to pay qualified medical expenses for the following:

• Yourself
• Your spouse (regardless of whether you file taxes jointly or separately)
• Any HSA eligible dependents you claim on your tax return (your children, or a Qualifing relative dependent, and any children who are claimed on your ex-spouse's tax return 
• Anyone you could have claimed as a dependent, but weren't able to because he or she filed a joint tax return (for example, your married teenage kid who files a joint return with his or her spouse) earned more than $4,400 (in 2022), or you (or your spouse, if you file jointly) could be claimed as a dependent on someone else's tax return.

Thanks for allowing me to chime in today!

[Anonymous]

Hello crimsondryad,

Thanks for participating in our Ask the Experts event today. As to your question, the IRS allows you to use your HSA in limited circumstances where they are not a dependent. One of those situations is if you could have claimed them as a dependent except that they made more than $4,400 (see Publication 969, page 9, starting at the bottom of the first column). So, you should be fine using your HSA for your daughter as long as she meets the qualifications as a dependent except for the earned income amount.

I hope that helps.

[crimsondryad]

As a follow up, can my daughter get an HSA on her own that she can contribute to without being on her employer's health plan? Would that impact my ability to pay for her using my HSA while she is building a sufficient balance to cover her expenses?

[Katie-P]

Hi @crimsondryad,

Since your daughter is on your health insurance (which I assume is a HSA-qualified plan), then she can open her own HSA. 

The IRS states the following on page 3-4  of Publication 969:

"Qualifying for an HSA Contribution
To be an eligible individual and qualify for an HSA contribution, 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.
• You aren’t enrolled in Medicare.
• You can’t be claimed as a dependent on someone else’s 2022 tax return."

As we discussed earlier, your daughter cannot be claimed as your dependent because her income was too high. I suggest she open up her own HSA and contribute the max, if she can afford it. I wish I was 19 and eligible to contribute to an HSA! 🐵