# HSA account, insurance for kids question



## Thor (Oct 31, 2011)

We're starting the divorce process and I have a pretty good idea of how I want things split up. But I haven't figured out what makes sense with the Health Savings Account and insurance. Your opinion or experience is much appreciated.

For simplicity sake let's work with this:

1) $10k in the HSA account, which is in my name but is for family coverage including stbxw and two adult children. _I fully agree stbxw is entitled to half the value in the account_.

2) After the divorce is final, she will have her own health insurance through her work. It does not include a high deductible HSA option. This is a complication, I believe, because she can't just take $5k and put it into her own HSA. I believe this would make the $5k a taxable distribution to her.

3) I will probably keep insuring the children. Thus, any expenses they have up to the high deductible and the family maximum out of pocket will come from my HSA.

4) She will get the tax deduction for the children as dependents.

I see the HSA as pre-paid medical. There is a tax benefit to saving the money ahead of time, which is a complication but otherwise doesn't figure into how we split it up. In the end the money will go to medical services for the children _if there are any expenses_.

So here's where I can't find clarity. Let's assume she does not take the $5k and there are negligible medical expenses for the kids while I am insuring them. In effect she just gave me $5k. But let's say next year there are max expenses for both kids, which would be something over $10k. In that case I need the entire $10k of pre-saved money to pay those expenses. The $5k she did not take gets used for the purpose it was saved for. But if she took the $5k then I am footing the entire bill and in effect gifted her the $5k.

Given that there are 4 of us, perhaps $2500 of the $10k is her share of pre-paid money. She will certainly at some point in her life spend that money on medical care. So maybe I keep $7500, she takes $2500, and whatever future expenses I or the kids have come out of my insurance and HSA, while her future medical is on hers. The $2500 would have some tax questions if it doesn't go into an HSA in her name.

As a totally different direction, perhaps she should insure the kids under a family plan, while I just insure myself. She gets the tax deduction for them (which includes a nice tuition tax _credit_), so perhaps she should insure them? In which case is it fair for her to take $7500 from the HSA? That would more than pay her premiums and deductibles for a year or more.

What seems fair?


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## Unicus (Jun 2, 2016)

How old are the adult children in question? You can only keep them on your plan until age 26.


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## larry.gray (Feb 21, 2011)

I can answer on #2

An HSA is always usable on medical expenses without taxation. You just can't contribute while in a non-HDHP. The account stays open, and is useable to withdraw only. On a regular health plan, it is a nice nest egg that can last a while, especially if she uses an FSA too.

You have to make the transfer to her name before she is off your insurance. The bank you are with for the HSA can do this.


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## Thor (Oct 31, 2011)

Over 18, under 26. One in college, one in grad school.

In my state child support only goes to 18, thus there is no legal requirement to provide anything including health care. But we are responsible and will do so as necessary.


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## larry.gray (Feb 21, 2011)

Fair OTOH seems more like $2500

Simpler would be to up something else by $2500 and leave all $10K in the HSA.

BTW, what is your out of pocket maximum? Mine was $9300, I got hit with that and the next year they dropped it to $6K. I ask because it dies figure into a target minimum that's nice to have.


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## Thor (Oct 31, 2011)

Deductible is $5k, then we pay 20% of everything after that up to a max of $6850 out of pocket. That's for family, which would be me plus the 2 kids.

If I go solo, deductible is $2500, then 20% copay up to max out of pocket $5000. The difference in premiums is $750 annually for only covering myself.

Thus to cover the kids I am paying at least $750 more, and then various scenarios of deductibles kick in.


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## foolscotton3 (Nov 13, 2014)

Thor said:


> Deductible is $5k, then we pay 20% of everything after that up to a max of $6850 out of pocket. That's for family, which would be me plus the 2 kids.
> 
> If I go solo, deductible is $2500, then 20% copay up to max out of pocket $5000. The difference in premiums is $750 annually for only covering myself.
> 
> Thus to cover the kids I am paying at least $750 more, and then various scenarios of deductibles kick in.


So cover the kids on your insurance plan and relieve your stbx of having to cover the children for say, 5 years until you have spent the 10k on them.

Giggity Giggity


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## Thor (Oct 31, 2011)




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## foolscotton3 (Nov 13, 2014)

Thor said:


>


Portion the money to cover your children's medical insurance premiums (which are tax free so it's in the same category.) It's marital funds, if you can split it, spend it on marital liabilities (your marital children) if you can separate the funds or just keep a record of what you have spent over time.

Giggity Giggity


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