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HSA Continuation Coverage and Expenses?

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I have been contributing the family maximum to my HSA for the last 4 years and have seen the account grow significantly.  My intention is to avoid dispersements as long as I can to build up enough pretax money in the account to be used in my later years to either bridge the Medicare gap for early retirement or pay for supplemental insurance once I reach Medicare age. Currently, my Wife and last eligible child is on my HDHP plan.  Our contribution to the HSA is directly deducted from my paycheck. We file our taxes jointly. My son is not a dependent on my tax return but is eligible for my health insurance until he is 26 yrs old.


1. If my wife takes another job and is signed into another health plan and off of mine, can I still use the money we contributed as a family to the HSA to cover any of her healthcare expenses going forward? 

2. If my eligible child signs into another healthcare plan but it does not cover dental or vision, can I use my HSA account for any of his expenses?

3. If I pass away before my wife and there is still money in my HSA, can she use the money for her medical expenses or the does the HSA have to be dispersed and taxed to the estate?

Any info would be helpful.


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First, your plan to defer distributions is sound, because medical expenses in retirement are significant. However, a couple of small clarifications. Early retirement private health insurance premiums and Medicare supplement plans are not qualified medical expenses. On the other hand, COBRA, Medicare Part B/D premiums and LTC premiums are. Of course as are all out-of-pocket costs (deductibles, co-insurance, co-pays, etc..) for medical, dental, vision, etc... before and after Medicare. 

1. Yes, your HSA can be used to cover an unreimbursed qualified medical expenses of you, your spouse and your dependents. However, be very careful. If she contributes to a general purpose FSA that can be used to reimburse your medical expenses (almost all do), this will make you an ineligible individual to make HSA contributions.

2. Note the bolded dependents from above. Once your son was not your dependent, his unreimbursed medical expenses are no longer qualified medical expenses for your HSA.

However, there is a loophole. Because he is no longer your dependent, he is an HSA eligible individual as long as he does not have other disqualifying insurance. He is eligible for his own HSA account and he (or you on his behalf) can also contribute the full family plan limit. So generally, it would be best to keep him on your plan until age 26 unless there is real cost savings.

3. As long as you make her the beneficiary, your HSA becomes her HSA with all the distribution rights therein. The worst result is leaving an HSA to your estate. I also suggest you make your son a contingent beneficiary.

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