You can use your Health Savings Account (HSA) to pay for qualified medical expenses for your spouse or a dependent, including dependent relatives, even if the person is not a listed on your High Deductible Health Plan (HDHP).
The answer to your question really depends on whether your HSA funds will be used on a relative that is considered a dependent by the IRS. A dependent relative is a relative you claimed on your most recent tax return or could have claimed.
If you could have claimed your relative on your tax return, but did not, it must be for one of the following reasons: 1) your relative filed a joint return with someone else; 2) your relative earned more than $4050 in wages and had to file his or her own return; or 3) you were claimed as a dependent on someone else’s tax return.
If you are under the age of 65 and use your HSA funds on a person that is not a dependent or spouse, the amount will be subject to income tax and a 20 percent penalty. If you are over 65, it will be subject to income tax.
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