Keeping adult kid on insurance

happymomof1
Thu, 29 Oct 2015 02:10:18 +0000

Re HSA:

Only certain health insurance plans are eligible for an HSA. So if your kid doesn’t sign up for that insurance plan, he can’t set up the HSA.

Money can only be contributed to the HSA during a year that a person has a qualifying insurance plan, but once that money is there it can stay there forever and be used for future qualifying expenses no matter what kind of health insurance policy the person has at that later time. There also is a point (age 59 1/2 I think) where it can be rolled into a regular IRA without penalty.

For a young person with good health and decent income, an HSA-eligible health insurance plan can be a good way to beef up savings in general, with an eye to long-term retirement planning. However, the person thinking about this needs to investigate the banking entities that might hold the account. Some have relatively significant fees if the account balance drops below $XXX. When I had an HSA, I had to keep the balance above $500 in order to avoid fees. Eventually I used the last $501 toward a big medical bill, and closed the account.