Health Savings Accounts for Your Children
By Andy Richardt on July 17, 2025
Many of us are aware of the following tax benefits of Health Savings Accounts (HSAs):
- Contributions are an above-the-line tax deduction and do not require itemizing.
- HSA assets can be invested and any earnings are tax-deferred.
- Withdrawals for qualified medical expenses are tax-free and penalty-free.
What you may not know is that children under the age of 26 can contribute to their own HSA if:
- The child is covered by the parents’ medical plan and has no other health coverage.
- This medical plan is a High-Deductible Health Plan that is HSA-eligible.
- The child cannot be claimed as a dependent. Here is a link to more information from the IRS about dependents as this can be complicated.
Now for the good news – if your child qualifies, an HSA can be opened in the child’s name and contributions can be made from any source, meaning you can contribute on your child’s behalf. Even better news, if the coverage is for a family plan, up to $8,550 can be contributed to the child’s account for 2025, even if the parents are also contributing the maximum to their own account. Contributions must be pro-rated for the year in which the child turns 26. The icing on the cake is that these contributions also reduce the child’s taxable income. What an excellent way for your child to build savings for future health expenses while also reducing their Federal income taxes!
Please reach out to learn more about this and many other planning strategies. As with any tax strategy, this should also be discussed with your accountant or tax preparer before proceeding.
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