I cover my husband and stepchild on my HDHP insurance with an HSA account. Recently, we discovered that the child's mother purchased insurance to cover herself and her children, including my stepchild. This insurance is not an HDHP. She has had the insurance for almost six months but we were only informed a few days ago. To our knowledge she has not submitted any claims for the child through this insurance, but husband and I have submitted claims for the child to my HDHP insurance and paid for them from the HSA (before we knew the child was covered by additional insurance).
- What are the tax/legal implications for my husband and I now that we are aware my stepchild is covered by a non-HDHP health plan as well as my HDHP plan?
- Can the child remain on my HDHP insurance until open enrollment? Can we insure them next year on my HDHP?
- Can we still use my HSA to pay for the child's medical expenses?
- Could we face tax penalties or other repercussions?
- What are the next steps we should take with our insurance
When I initially read the IRS guidelines for HSAs (https://www.irs.gov/publications/p969), my understanding was that if you are covered by an HDHP with an HSA, you cannot be covered by any other type of insurance. The answer to this question (Can I use HSA money to pay for family member that isn't covered by an HDHP?) makes it sound like these restrictions might only apply to the HSA account holder (me), so it would be permissible for my stepchild to be covered by other insurance because they are not the policy holder. Can someone clarify?
I have reviewed the following questions but they do not address our situation:
- Dual coverage and HSAs (mother's health insurance is not HDHP)
- HSA without a HDHP [USA] (we still have the HDHP insurance)