I am an independent child under my parents' insurance plan (I'm 24). Can I still be covered by my parents' HSA account?

[Opus 17]

@bos3 

You would only lose eligibility for 2020 if you are following the “last month“ rule. The last month rule says that you are considered eligible for the entire year as long as you have coverage on December 1 of that year and you maintain coverage for all of the next year.

If you are eligible for all of 2020 because you had eligible coverage for the entire year, then you are not relying on the last month rule.  

Let’s suppose you had eligible coverage starting September 1, 2020, but you contributed a full $3550 or full $7100 because you were relying on the last month rule, and then you lose your coverage in 2021. You are still eligible for the 4 months when you had coverage, but you lose the last month rule, so that in this example, 8/12 of your contributions become ineligible.

Eligibility is determined by your insurance coverage on the first day of each month.  If you are covered by your parent‘s eligible plan on May 1, and then you enrolled in a different eligible plan as of June 1, then you have maintained your eligibility, even if there was a break between your birthday and June 1 while you arranged new coverage.  If you did not obtain new coverage until June 15, then your HDHP eligibility begins July 1, and since you had a one month break in 2021, you would lose your qualification for the last month rule )if you were relying on it.)

[bos3]

Thank you so much for the clarifying in such details.

I have had only family HDHP via parent for since 2018.  So, for 2020, I have family HDHP for the entire year.  I can contribute my own HSA account for  $7100 since I am on family plan & no last month rule apply.

In 2021, when i turn 26 in May - so i would have 5 month of family HDHP and let's suppose i get a HDHP starting in June 2021 - how would i figure out my HSA contribution for 2021.  Is it 5/12 of 7200 + 7/12 of 3600?

Thank you so much for your time and thoughtful answers.

Alice

[Opus 17]

@bos3 

Your calculation is correct.  

[bos3]

@Opus 17   I just funded my own HSA for 2020  on feb 28, 2021.  Is my doctor payments made during 2020 ok as expense to disburse from my HSA account?

I had plan on saving my receipts and disburse the funds later.   Since I paid my 2020 medical expense out of pocket - I wanted to know if I should start saving the documents starting on 1/1/2020 expense forward or 2/28/2021  since that is the day of HSA account creation.

Thank You so much as always.

[Opus 17]

@bos3 

Medical expenses are only qualified to be reimbursed from an HSA if they are incurred after the HSA was opened.  If you were eligible to open an HSA in 2020 under your parent‘s insurance, but you did not realize it and only opened the HSA this week, then you cannot reimburse yourself for past expenses.

[ehj8ehj8]

Hi, I'm divorced and am on my ex-husband's family medical insurance. It's a HDHP and I'm interested in funding my own HSA. Can I do this? What's the maximum that I could contribute given that it's a family plan? I don't know if he contributes to his own HSA plan but would I need to split the contribution amount with him or could I contribute the maximum for a family (with a catch up as I'm older)? Thanks for any help on this.

[Opus 17]

@ehj8ehj8 

If you are covered by a family HDHP and have no other disqualifying coverage, your contribution limit for 2021 is $7200, Or $8200 if you are age 55 or older. If you are unmarried, you do not have to share that limit with your ex-spouse.

[ehj8ehj8]

Thank you so much for your response. Just one more quick question on this: I had an FSA during 2020 that ended in September. I spent the last money left in the account in October. Can I still contribute the full amount for 2020? Thank you!

[Opus 17]

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@ehj8ehj8 wrote:

Thank you so much for your response. Just one more quick question on this: I had an FSA during 2020 that ended in September. I spent the last money left in the account in October. Can I still contribute the full amount for 2020? Thank you!

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You can contribute to an HSA in your name, retroactive to 2020, as long as you do it before May 17, 2021.  You will also have to tell the HSA bank this is a 2020 transaction so they process it correctly.  Then, you can take the tax deduction on your 2020 tax return.

The amount you can contribute can be calculated in 2 ways.

If you use the last month rule, you can contribute the full amount for 2020.  This would mean that, if you were covered by a family HDHP on December 1, 2020, you can contribute the full amount, as if you were covered all year.  However, if you lose your HDHP coverage at any time during 2021, you retroactively lose your 2020 eligibility, and will be subject to additional income tax and penalties.  The full amount would be $7100 for a family HDHP or $3550 for a single HDHP, minus any amounts already contributed to an account in your name.  

Or, you can contribute based on your eligibility on a month by month basis.  You are eligible to contribute up to $295 or $591 for each month that you had eligible HDHP coverage (and no other disqualifying coverage) -- eligibility is determined on the first day of each month.  And you have to account for any amount already contributed, of course.  If you use the month-by-month method for your 2020 contributions, you don't run into problems if your health insurance changes in the middle of 2021.