Affordable Care Act
When the Affordable Care Act was enacted in 2010, it included a provision that children be allowed to remain on their parent's health insurance plan until age 26.
This created a unique HSA provision that allowed those individuals to open an HSA and contribute as long as they were no longer tax-dependent (not claimed by anyone as a dependent on their taxes). This is an opportunity for young people to create a long-term health savings vehicle that can be used or invested for many years.
Eligibility requirements
Your dependent must:
Be covered by a parent's HSA-eligible HDHP
Be under 26
Not be claimed as a dependent on anyone else's taxes
Have no other health insurance (other than the parent's plan)
Not be enrolled in Medicare
What is not required
You don't need to have an existing HSA or contribute to one for your child to be eligible
You can contribute to your own HSA at any level, independent of this situation
Contribution limit
If your child is eligible in this situation, they can contribute up to the current year's family limit — even though they're opening a separate HSA from yours — as long as your plan covers both of you.
What this doesn't change
You can use your HSA funds for your child's medical expenses if you claim them as a dependent, but not if you don't claim them as a dependent.
Narrow Exception
If your child could have been claimed as a dependent except that they filed a joint return, had gross income at or above the exemption amount, or you (or your spouse, if filing jointly) could be claimed as someone else's dependent, their expenses may still qualify.
This exception applies to those specific technical reasons only. It doesn't apply if your child simply isn't a dependent because they provide their own support.
Recap
Adult children can stay on a parent's health plan until 26
A non-dependent child under 26 on your HSA-eligible plan can open their own HSA and contribute up to the family maximum
You can't use your HSA to cover a non-dependent child's expenses