Individual HSA - Claiming Dependent Costs

[Guest BeneGal]

If an employee elects an individual HSA (debit card operated) and leaves the company with a $1200 balance... He goes to an employer who has no HSA, can he

1. Continue to put pre-tax contributions from his current employer into the HSA that is still being "administered" by his former employer?

2. If he chooses not to put any more money into the account, can he pay for his son's orthodontia expenses with his $1200 balance even though he originally elected the HSA for an individual?

We don't do HSA's... so I couldn't answer this question which came from a business associate. I told him I would put it on the "magic board"

Thanks in advance for replies...

[Guest fritzreb]

1. Continue to put pre-tax contributions from his current employer into the HSA that is still being "administered" by his former employer

No, not unless he continues to participate in an HSA eligible high deductible health plan. If he does continue to participate in an HDHP he can make contributions to his health savings account and will receive an above the line deduction (not pre-tax contributions from his current employer).

2. If he chooses not to put any more money into the account, can he pay for his son's orthodontia expenses with his $1200 balance even though he originally elected the HSA for an individual?

Yes. The HSA can be used to pay for eligible medical expenses for the individual or dependents, but the contributions are limited to whether the individual elected an indvidual high deductible health plan or a family high deductible health plan. The high deductible health insurance plan will only provide coverage for the individual enrolled, not his family members. The Health Savings Account can be used to pay for his deductible expense under his single coverage high deductible health insurance plan or the funds can be used to pay for other eligible medical expenses not associated with his health insurance plan, such dependent exepenses for dental, vision, over the coutner drugs, etc. Even if the orthodontia expenses are incurred 5 years after the indiviudal stops contributing to the HSA the funds can be withdrawn without penalty to pay for eligible medical expenses for himself or his dependents.