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When I was hired I chose to be included in the company's health insurance policy and to have an HSA opened since my company makes a yearly contribution. However, I am still under 26 and could be covered under my parents insurance.

Since they have already reached their max-out-of-pocket(it begins again in march), it would make some sense to continue to use their insurance at least until march.

Is this possible?

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  • Note that two policies from two different providers on the same thing -- you, in this case-- may be begging for arguments between them about who pays how much for what.
    – keshlam
    Mar 3, 2016 at 14:53

2 Answers 2

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I see three issues:

  • Your HSA. You have to be sure that your HSA will be allowed while you are using your parents insurance. This is a tax issue.

  • Your parents insurer/employer. When two spouses work enough hours to qualify for their own policy from their employer; in many cases the company of spouse 1 wants to make sure that the policy of spouse 2 is primary for the coverage of spouse 2. The passage of the Affordable Care Act extended coverage to children under the age of 26, but I am not sure how it handles the case of a child who is eligible for coverage from their own employment.

  • Open season. When you started with your new employer you were given a window to signup for coverage. You were then locked in to that level of coverage until the next corporate open season, or until you have a life event. You will have to make sure that any changes you want to make you can make, and that if you want to re-enable them in March that you can.

Your parents had an opportunity to drop you from their insurance, because your ability to get insurance was a life event for them. Depending on when their open season is and when you started, they may have to wait until their next open season to make a change.

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    So I can be covered by both insurances at the same time? My parents insurance is a PPO plan, I believe, which, I guess, doesn't allow HSAs. Does that mean that if I chose to use their plan until march I have to pay taxes on my contributions until then?
    – TsSkTo
    Feb 3, 2016 at 13:23
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Simplest answer is yes, though it may fall afoul of certain tax laws.

If your parents are in a plan that is eligible for HSA (and you are on it/could be added), and your work insurance is ok with the double coverage, you should be fine.

If your patents have a lower deductible plan, technically you cannot do the HSA and realize the tax benefits (check the fine print well and consult a tax advisor). You may be able to contribute post tax (again, check with an accountant or tax advisor to be sure) which is handy if your company contributes anything to the HSA. Again, you need to check specific company and plan policies though. If you have money in the HSA already and stop contributions you might be eligible to still use the remaining funds, though I would keep it open for the tax benefits if you don't desperately need the money.

A word of caution, do not try to just risk it. Although you might get away with doing an HSA with a second low deductible plan, you could get caught and face penalties (at a minimum you would owe taxes, but depending on the specific circumstances the penalty could be more severe, especially if it is construed as part of a tax evasion attempt).

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