If you want your children to stay on your health plan as they go to school and enter the work force, there are things you need to know, especially if you have a health savings account (HSA). You can keep your dependents on your health plan until they turn 26, but if you have an HSA, you can only use your HSA to pay for their eligible medical expenses while they are your tax dependents.
Although the federal law requires children to be eligible for their parent's health plan until the age of 26, some states and plans may allow dependents to remain on their parent's health play beyond that age. Check with your employer or plan to confirm.
Do my children qualify as tax dependents?
For your child to qualify as a tax dependent, they must meet the following:
- Be under the age of 19, or under the age of 24 if a full time student (no age limit if the child is permanently disabled)
- Be your biological child, stepchild, adopted child or foster child, brother, sister, half brother, half sister, stepbrother, stepsister, adopted child or an offspring of any of them
- The child must have lived with you for at least six months
- The child cannot earn income of more than half the cost of their support expenses
- The child cannot file a joint tax return
- No one else may claim the child as a dependent
However, even if your children are not tax dependents, they can still be enrolled in your health plan until they turn 26, even if they are married, don’t live with you, have a benefits-eligible job, or not financially dependent on you.
How do my dependents work with my HSA?
If you have an HSA, you can keep your health care dependents on your high-deductible health plan (HDHP) until they turn 26 years old. However, the IRS only allows you to use your own HSA funds to pay for qualified medical expenses for any dependents you claim on your tax return. This means that once your child turns 24, they may still be on your HDHP, but you can’t use your HSA for their medical expenses.
Once your child is no longer your tax dependent, they are eligible to open their own HSA, even if they are still enrolled in your HDHP. Since they are part of your family HDHP, they can contribute up to the family maximum. Additionally, you can contribute to your child’s HSA on their behalf if you choose to. You should note, though, if you contribute to your child’s HSA, your child will receive the tax benefits for those contributions – not the parent.
If you are able to help your child grow their HSA, it could help your children be more prepared for medical emergencies while they are younger, and help them be more comfortable enrolling in their own HDHP knowing they won’t be starting their HSA from scratch.
HSA contribution limits
The table below displays the current HSA contribution limits. Current contribution information can be found on the U.S. Department of Treasury website at treas.gov.
|Tax Year||Individual Coverage Limits||Family Coverage Limits|
Once age 55, members can contribute an additional $1,000 towards their HSA (either individual and family coverage).