HSA Contribution Limit for Adult Working Child in the Family HDHP Plan

[deepchandi]

What is the HSA contribution limit for adult working child filing individual return, but included in the family HDHP plan of the parents?

I believe the child can independently contribute $7000 to his/her own HSA account since the parents are not allowed to use their HSA funds for a child who is not a dependent.  I would like to confirm this. 

My child is covered under my family HDHP plan. I have contributed the maximum $7000 to my HSA for 2019. My child recently started working and filing the individual return for 2019. She signed up for her individual HDHP plan through her employer (I believe one is allowed to have multiple HDHP plans). Since she is included in my family HDHP plan, what would be the limit for her HSA contribution for 2019? Can she contribute $7000 to her HSA independently because she is covered by the family plan? 

[Anonymous]

she really doesn't have family coverage, you do. she has self only coverage max contribution $3,500

under your assumption, it would be possible for a husband and wife to each contribute $7,000 if both were covered under your family plan 

[deepchandi]

Thanks for your response. I have a follow-up question on this, based on the articles published by HSA providers.

My daughter is covered under my family HDHP Plan, and she is filing as non-dependent (individual return).

There are multiple articles on the HSA account contribution by non-dependent adult children covered on the family HDHP plan. Please see the linked below.

#1. Because the employee’s HSA funds can’t be used for this dependent, the adult child may wish to establish a separate HSA for his expenses. However, there is something unique about this situation that many don’t realize. Because this child is covered on a family-qualified HDHP, opening a separate HSA would allow the child to contribute up to the allowed maximum family contribution of $6,750. So, the parent (your employee) could have an HSA and contribute the allowed maximum family contribution of $6,750 and the dependent adult child could contribute up to $6,750.

#2. 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.

https://americanfidelity.com/blog/reimburse/hsa-mistakes-dependents/

https://www.onedigital.com/blog/[product key removed]ren/

I would appreciate your opinion in this matter.

[BillM223]

Yes, the ability of an adult child who is not a dependent but who is on the parents' HDHP policy is a bizarre and unforeseen consequence of the HSA code in Section 223 and the later Affordable Care Act (Obamacare, ACA) which, among other things, changed health insurance so that you could keep your adult children on your policy even when they are no longer your dependents. (The ACA was passed years after the HSA code was passed).

So, yes, daughter can open an HSA and contribute to it until such point as she is no longer on any HDHP policy.

Just to clarify "#2. As long as they are covered on the family qualified HDHP, adult children can contribute the full family HSA amount into their HSA account." should read "into their own HSA." The limits are applied to each HSA.

Actually, the daughter can contribute to the HSA of whichever parent is the owner (HSA belong to the individual, so each parent could have one - BUT the Family limit is shared between them), but the parents must count all contributions to his/her HSA from any source. So in this case, it would make sense for the daughter to make all of her contributions to her own HSA, which has its own limit.

[jpr123]

I have a similar question. My adult child will not be a tax dependent for 2021but was covered under my HDHP all year. I am age 51 and contribute after tax dollars to an HSA because work does not have one. So, I want to confirm the following:

I am eligible to contribute the family amount of $7200 for 2021and deduct it from my income on form 1040?

Also, my daughter can open her own HSA and contribute up to $7200? 

My husband has a self only medical plan and his company offers an HRA. This does not effect my HSA contribution amount. Also, he is not eligible to contribute anything to an HSA since I contribute the full $7200 but we could have split that amount between us?

Thanks in advance!

[Opus 17]

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@jpr123 wrote:

I have a similar question. My adult child will not be a tax dependent for 2021but was covered under my HDHP all year. I am age 51 and contribute after tax dollars to an HSA because work does not have one. So, I want to confirm the following:

I am eligible to contribute the family amount of $7200 for 2021and deduct it from my income on form 1040?

Also, my daughter can open her own HSA and contribute up to $7200? 

My husband has a self only medical plan and his company offers an HRA. This does not effect my HSA contribution amount. Also, he is not eligible to contribute anything to an HSA since I contribute the full $7200 but we could have split that amount between us?

Thanks in advance!

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Under your specific facts:

We first have to look at the HRA.  Most HRAs count as disqualifying medical coverage for an HSA.  This is because you can use HRA funds when you are still under your deductible.  And most HRAs allow the employee to pay for costs for themselves, their spouse and their dependents, including children under age 27.

That means that, in general, both you and your child are disqualified from contributing to an HSA, because your spouse's HRA is considered disqualifying "other health coverage."

There are two possible ways around this.

1. Your spouse's employer plan specifically says the HRA can only be used for self expenses and can't be used for spouse or children.  This would have to be in the plan contract and would be a very unusual provision.  I suspect the HRA can be used for your and your child's expenses.

2. The HRA is an "HSA-qualified HRA."  That would mean that your spouse was not eligible to request HRA funds until he had covered the minimum HDHP deductible, which was $2800 for a family HDHP for 2021.  If he could use the HRA to pay your or your child's deductible costs, then you are not eligible to contribute to an HSA. 

If we assume that you are HSA eligible and that your spouse's HRA is HSA-qualified, then your contribution limit is $7200 and your child's contribution limit is a separate $7200.   If your spouse's medical plan is HSA eligible (it's a qualifying HDHP and the HRA is HSA eligible) then your spouse can also contribute to an HSA their own name, and your combined limit is also $7200--you can split your combined limit any way you choose and your combined limit is separate from your child's limit.

But check that HRA, I suspect it dooms you. Sorry. 

[jpr123]

Thank you for your very knowledgeable answer. Turns out, #1 applies to my husbands's HDHP w/ an HRA so I can contribute to an HSA of my own!