HSA Basics: Definition of Dependent

As you likely know, the IRS regulates HSAs. They set the rules regarding tax treatment of HSAs, including the definition of a dependent. Health insurance carriers define “family” as the employee and his/her spouse and children. The IRS defines “family” as the taxpayer plus one more person. And that person must pass the test of a “dependent” from an IRS perspective.

A dependent is defined under Code section 152. The Code has a two-prong definition of dependent:

  • Qualifying child – a qualifying child is any child (son, daughter, brother, sister, niece, nephew, grandchild) who passes three tests: 1) will not be age 19 during the year (or 24 if a full-time student). An exception is made for a disabled “child” who is considered as satisfying the age requirement despite actual age; 2) has the same principal place of residence as the taxpayer for more than half the year; and 3) does not provide over half of his/her own support.
  • Qualifying relative – a qualifying relative is any individual who meets four criteria: 1) is not a qualifying child of any other person; 2) has income less than the exemption amount ($3950 for 2015); 3) receives over half of his or her support from the taxpayer; and 4) if a non-relative, resides with the taxpayer the entire year.

Why is the IRS dependent definition important to you?

If you have dependents that meet the above tests, then you may use your HSA funds to pay for their medical, dental and vision expenses. And you may contribute more to your HSA account. In 2015, you may contribute $6650 vs. $3350 if you were single. Contributions may be deducted “above the line” on your tax return or made pre-tax if you are enrolled in a flex plan at work.

If you have any questions, contact us at customer.service@sterlingadministration.com or 800.617.4729.

Don’t Forget! Maximize Your HSA to Reduce Taxes and Increase Savings

If your weekend plans include finishing up your taxes, don’t forget to first contribute the maximum to your Health Savings Account. By doing so, you can reduce your taxes  and increase your savings for healthcare or retirement expenses.

You can contribute for 2014 until April 15, 2015.

For 2014, you and/or your employer can contribute in total up to $3,300, if you are under age 55 and have single HSA compatible health coverage, and up to $6,550, if you are under 55 and have family HSA compatible health coverage. Be sure to note online or on your check that the contribution is for 2014.

HSA members who are 55 and older and not receiving Medicare benefits can make an additional “catch-up” contribution of $1,000. Your spouse is also entitled to a $1,000 catch-up contribution, if he/she meets the eligibility requirements of 55 years and older and not on Medicare benefits. Your spouse must open a spousal HSA account, a quick and easy process that we can help you with.

Note: If you’ve already filed your 2014 taxes and want to make an additional contribution to your HSA for 2014 up to the limits allowed, contact your tax advisor on how this impacts your tax filing.

For additional information, please contact Sterling customer service at customer.service@sterlingadministration.com or call 800-617-4729. Customer service representatives are available Monday – Friday from 8 am – 6 pm Pacific time.

For Members: Carrier (EOB) Integration with Your Sterling Account For Claims Payment

Claims payment from an HSA, FSA or HRA account can be set up using our carrier (EOB) integration service for all HSA, FSA and HRA member clients. Set up requires you to have an online Sterling account and an online account with your health plan carrier. The service is available for most major carriers. Check here to make sure your health plan carrier is supported.

Once set up, you can:

  • Manage medical claims information all in one place.
  • Access your HSA, HRA or FSA to identify available balances and choose to pay providers or reimburse expenses already paid.
  • Pay right away or select a future payment date.
  • Choose the amount of payment or reimbursement up to what the claim allows.
  • Link to a dependent’s EOB information within HIPAA requirements.
  • Electronically keep records of receipts and other documentation related to medical claims, payments and reimbursements in a secure, HIPAA compliant database.

For instructions on setting up and using the service, please view or download the Sterling Carrier Integration Guide. Contact Sterling customer service at 800-617-4729 or customer.service@sterlingadministration.com for more information or help with the set up.

Maximize Your 2014 HSA Contributions Before April 15

Uncle Sam wants your money. So does your HSA. The 2014 tax filing deadline is less than a month away, but it’s not too late to contribute the maximum allowed for 2014 to your health savings account (HSA). You can contribute for 2014 until April 15, 2015.

For 2014, you and/or your employer can contribute in total up to $3,300, if you are under age 55 and have single HSA compatible health coverage, and up to $6,550, if you are under 55 and have family HSA compatible health coverage. Be sure to note online or on your check that the contribution is for 2014.

HSA members who are 55 and older and not receiving Medicare benefits can make an additional “catch-up” contribution of $1,000. Your spouse is also entitled to a $1,000 catch-up contribution, if he/she meets the eligibility requirements of 55 years and older and not on Medicare benefits. Your spouse must open a spousal HSA account, a quick and easy process that we can help you with.

If you’ve already filed your 2014 taxes and want to make an additional contribution to your HSA for 2014 up to the limits allowed, contact your tax advisor on how this impacts your tax filing.

What About 2015 Contributions?

In 2015, the maximum amount that can be contributed to your HSA is $3,350 if you are under age 55 with single coverage and $6,650 if you are under age 55 with family coverage. The same “catch-up” contributions apply in 2015 as outlined above for 2014.

For additional information, please contact Sterling customer service at customer.service@sterlingadministration.com or call 800-617-4729. Customer service representatives are available Monday – Friday from 8 am – 6 pm Pacific time.