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Divorce and Health Savings Accounts

Certain life events can affect your health insurance as well as your health savings account. A divorce or separation can have an impact on your Health Savings account. In fact, the most common question we receive from those going through a divorce or separation is:

“My ex-spouse claims our child as a dependent, can I reimburse that child’s eligible expenses tax free from my HSA?”

Answer: Yes

IRS guidelines allow parents to reimburse a child’s eligible expenses tax free from either parent’s HSA, regardless of who claims the children as tax dependents in any given year. 

A child of divorced or separated parents can be treated as a dependent of both parents if:

  • Child is in the custody of one or both parents for more than half the year
  • Child lives apart at all times during the last six months of the year
  • Child receives more than half of his or her support during the year from his or her parents
  • Parents are divorced or legally separated under a decree or divorce or separate maintenance
  • Parents are separated under a written separation agreement

IRS Publication  969 , page  8 states:  “For  this  purpose,  a  child  of  parents  that  are  divorced, separated,  or  living  apart  for  the  last  6  months  of  the  calendar  year  is  treated  as  the dependent  of  both  parents  whether  or  not  the  custodial  parent  releases  the  claim  to  the child's exemption.”

For more information about HSA and divorce, please visit:

https://www.irs.gov/pub/irs-pdf/p969.pdf

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