High deductible health plans and your adult children on your insurance (you need to know)

 What you don’t know could get you audited.

Luckily I had came upon this a few years ago when my oldest went out on his own. But I was disappointed to find that our congress and most HR staff didn’t know that when congress allowed parents to keep their children on their health insurance until age 26 and high deductible health plans (HDHP) came along they didn’t fix tax code to match up to the change and make it make sense.

So yep you can keep them on there but you cannot pay their medical bills with your HSA (health savings account) finds unless you are able to legally claim as a dependent. That’s really only possible with student adult or disabled children. Publication 969 explains all of this.

When I tell HR this they say well just have said child open their own HSA? That does work if your child also has their own employer sponsored HDHP. If not, the employer won’t set up an HSA so the child would have to get their own through a bank and most local banks will charge fees AND they’re no longer getting the tax savings of having it deducted from their paycheck. You’re better off putting it anywhere else at that point.

In my middle sons case, he got a job with the same large organization I happen to work for, so they don’t allow him to have his own and be on mine. So he’s only going to be on mine so at least he gets the benefit of meeting the family deductible until later, when he turns 26. And if he decides to return to grad school this will be better in the long run.  In my middle sons case, he got a job with the same large organization I happen to work for, so they don’t allow him to have his own and be on mine. So he’s only going to be on mine so at least he gets the benefit of meeting the family deductible until later, when he turns 26. And if he decides to return to grad school this will be better in the long run.

Fortune, when they turn 18 in my house I made them open a Roth IRA. They all work at age 16, so they all can legally contribute. They just open it with $2k to start and that starts the clock ticking on the 5 year rule.

That’s another topic for another day!  #healthinsurance #healthinsuranceadultchildren #adultchildinsurance #claimingdependents