Upon your health plan effective date after September 23, 2010, health plans that provide coverage for dependents of employees will be required to offer coverage to adult children of employees until they reach age 26. (Some employers may have begun offering this option as of March 30, 2010).
But, the tax law did not change the definition of a dependent for HSAs. You could have under your health plan an adult dependent child who is not a dependent for tax purposes. That means you’ll pay a penalty plus taxes if you use the pretax dollars from your HSA to pay health expenses for your older covered dependent.
Here are some steps you can take to avoid tax issues:
Effective January 1, 2011, the penalty for using your HSA funds for non-qualified medical expenses will be increased from 10% to 20%. Funds used for non-qualified expenses are also subject to income tax. See your secure Aetna member website for a list of qualified HSA expenses or visit the IRS website at www.irs.gov for a copy of Publication 502.
Right now, you can use your HSA to pay yourself back for all eligible over-the-counter (OTC) items, including medicines, with no restrictions.
Beginning January 1, 2011, you will need a doctor’s prescription if you plan to use your HSA funds to pay for OTC medications. You will not need a prescription to use your HSA for other eligible OTC items like contact lens solutions and bandages.
Here is a current list of drug categories that will require a prescription:
Talk to your HR representative or call Member Services at the number on your Aetna ID card.