Can I Use My HSA for My Girlfriend’s Expenses?

A Health Savings Account (HSA) provides a tax-advantaged way to save for healthcare costs. Funds can be contributed, grown, and withdrawn tax-free for qualified medical expenses. Understanding the rules for using HSA funds, especially for individuals other than the account holder, is important. This article clarifies who can benefit from an HSA and addresses common questions about covering expenses for non-dependent partners.

HSA Basics for Family Coverage

Health Savings Accounts help individuals save and pay for eligible medical expenses. Funds contributed to an HSA are typically tax-deductible, grow tax-free, and are tax-free when used for qualified medical expenses. This triple tax advantage makes HSAs a valuable tool for managing healthcare costs.

HSA funds can be used for the account holder, their spouse, and any qualifying tax dependents. While the account is opened under one individual’s name, its benefits can extend to certain family members. The ability to use HSA funds for others depends on whether those individuals meet the Internal Revenue Service (IRS) definition of a tax dependent.

The primary purpose of an HSA is to cover out-of-pocket medical expenses, which can include deductibles, co-payments, and other healthcare services not fully covered by a high-deductible health plan (HDHP). Without meeting specific IRS requirements for dependents, using HSA funds for another individual’s expenses can lead to tax consequences.

Defining a Qualifying Individual for Tax Purposes

Determining whether an individual can be covered by an HSA hinges on their status as a qualifying child or a qualifying relative for tax purposes. The IRS establishes specific tests that must be met for someone to be considered a dependent. A girlfriend, for instance, would generally fall under the “qualifying relative” category if she is not a qualifying child.

For an individual to be a “qualifying child,” they must meet several tests: relationship, age, residency, support, and joint return. The relationship test typically includes a son, daughter, stepchild, foster child, sibling, or a descendant of any of these. The age test requires the individual to be under age 19 or under 24 if a full-time student, or any age if permanently and totally disabled.

The residency test stipulates that the child must live with the taxpayer for more than half the year. The support test requires the child not to have provided more than half of their own support for the year. Lastly, the joint return test means the child cannot file a joint tax return unless it is solely to claim a refund of taxes paid or withheld. A girlfriend would almost certainly not meet these criteria.

For a non-relative, such as a girlfriend, to be a “qualifying relative,” they must satisfy a different set of tests: not being a qualifying child, meeting the member of household or relationship test, gross income test, and support test. The “not a qualifying child” test ensures they aren’t already claimed as a qualifying child by anyone. The “member of household or relationship” test is crucial for non-relatives; it requires the individual to live with the taxpayer all year as a member of their household.

The gross income test specifies that the individual’s gross income must be less than $5,200 for 2025. The support test mandates that the taxpayer must provide more than half of the individual’s total support for the year. If a girlfriend meets all these specific qualifying relative criteria, including living in the household for the entire year, earning below the income threshold, and receiving more than half of her support from the account holder, her medical expenses could be paid from the HSA. Common-law spouses or registered domestic partners may qualify if their state recognizes them as married for federal tax purposes.

Consequences of Ineligible Withdrawals

Using Health Savings Account funds for individuals who do not meet the IRS’s definition of a qualifying individual can lead to financial penalties. When withdrawals are made from an HSA for non-qualified medical expenses, these amounts become subject to income tax, increasing the account holder’s overall tax liability.

In addition to income tax, an additional 20% penalty tax typically applies to such ineligible withdrawals if the account holder is under age 65 and not disabled. For example, if $1,000 is withdrawn for a non-qualified expense, that $1,000 would be taxed as ordinary income, plus an additional $200 penalty. The penalty does not apply if the account holder is age 65 or older or becomes disabled.

Account holders are required to report their HSA activities to the IRS. This includes contributions made to the HSA and any distributions taken from it. This reporting is done on Form 8889, Health Savings Accounts (HSAs), which is filed with the individual’s income tax return. The form helps the IRS track whether withdrawals were used for qualified medical expenses or if they are subject to income tax and penalties.

Maintaining thorough records of all HSA distributions and qualified medical expenses is important. These records serve as documentation to demonstrate compliance with IRS regulations in case of an audit. Without proper documentation, it can be challenging to prove that withdrawals were for eligible expenses, potentially leading to the assessment of taxes and penalties on amounts that were legitimately spent.