Can HSAs be Used for Domestic Partners? Understanding the IRS Rules

Health savings accounts (HSAs) have become a popular tool for individuals and families to save money on healthcare expenses. However, when it comes to domestic partners, the rules around using HSAs can be a bit complex. In this blog post, we will explore the IRS rules regarding HSAs and domestic partners, and how you can navigate them to make the most of your HSA funds.

What is a Health Savings Account (HSA)?

Before we dive into the specifics of using HSAs for domestic partners, let's first understand what a health savings account is. An HSA is a tax-advantaged savings account that allows individuals with a high-deductible health plan (HDHP) to save money for medical expenses. The funds contributed to an HSA are tax-deductible, grow tax-free, and can be withdrawn tax-free when used for qualified medical expenses.

IRS Rules for HSA Eligibility

In order to be eligible for an HSA, an individual must meet certain criteria set by the Internal Revenue Service (IRS). These criteria include:

• Being covered under a high-deductible health plan (HDHP)
• Not being covered by any other health insurance that is not an HDHP
• Not being enrolled in Medicare
• Not being claimed as a dependent on someone else's tax return

If you meet these criteria, you are eligible to open and contribute to an HSA. However, when it comes to using HSA funds for domestic partners, the rules can vary depending on the circumstances.

Using HSAs for Married Spouses

If you are married and have a domestic partner, the IRS treats your domestic partner as a spouse for HSA purposes. This means that you can use your HSA funds to pay for qualified medical expenses for your domestic partner, just as you would for your spouse.

Using HSAs for Non-Married Domestic Partners

The rules become a bit more complicated when it comes to non-married domestic partners. According to the IRS, in order to use HSA funds for a non-married domestic partner, the domestic partner must qualify as your tax dependent. This means that you must provide more than half of your domestic partner's support, and your domestic partner's gross income must be below a certain threshold set by the IRS.

Additionally, your non-married domestic partner must meet all the other eligibility criteria for an HSA, such as being covered under a high-deductible health plan and not being covered by any other health insurance that is not an HDHP.

Understanding the IRS Interpretation

It's important to note that the IRS interpretation of the rules around using HSAs for domestic partners can be subject to change. The IRS has not provided clear guidance on this specific topic, so it's always a good idea to consult with a tax professional or financial advisor to ensure compliance with the most up-to-date regulations.

Recommended Articles

Here are some additional articles that you may find helpful:

• Married Spouses and HSAs: What You Need to Know
• Qualifying Life Events and HSAs: A Closer Look
• How to Maximize Your HSA Contributions

Conclusion

In conclusion, the rules regarding the use of HSAs for domestic partners can be complex. If you are married, you can use your HSA funds for your domestic partner's qualified medical expenses. If you are in a non-married domestic partnership, your domestic partner must qualify as your tax dependent in order to use HSA funds for their medical expenses. It's always a good idea to consult with a tax professional or financial advisor to ensure compliance with the IRS rules. By understanding these rules, you can make the most of your HSA funds and ensure that you are using them in a way that is in line with the IRS regulations.