Does
an HSA pay for the same things that regular insurance
pays for?
How
do I know what is included as “qualified medical
expenses”?
Who
decides whether the money I’m spending from
my HSA is for a “qualified medical expense?”
What
happens if I don’t use the money in the HSA
for medical expenses?
Are
dental and vision care qualified medical expenses
under a Health Savings Account?Can
I use the
money in my HSA to pay for medical care for a family
member?
Can
I use my HSA to pay for medical services provided
in other countries?Can
I pay my health
insurance premiums with an HSA?
Can
I purchase long-term care insurance with money from
my HSA?
I
have an HSA but no longer have HDHP coverage.
Can I still use the money that is already in the
HSA for medical expenses tax-free?
What
happens to the money in my HSA if I lose my HDHP
coverage?
Do
unused funds in a Health Savings Account roll over
year after year?
What
happens to the money in a Health Savings Account
after you turn age 65?
Can
I use my HSA to pay for medical expenses incurred
before I set up my account?
Who
will be the “bookkeeper” for my HSA?
How
do I use my HSA to pay my physician when I’m
at the physician’s office?
Does
an HSA pay for the same things that regular insurance
pays for?
HSA funds can pay for any “qualified medical
expense”, even if the expense is not covered
by your HDHP. For example, most health insurance
does not cover the cost of over-the-counter medicines,
but HSAs can. If the money from the HSA is
used for qualified medical expenses, then the money
spent is tax-free.
How
do I know what is included as “qualified medical
expenses”?
Unfortunately, we cannot provide a definitive list
of “qualified medical expenses”.
A partial list is provided in IRS Pub 502 (available
at www.irs.gov).
There have been thousands of cases involving the
many nuances of what constitutes "medical care"
for purposes of section 213(d) of the Internal Revenue
Code. A determination of whether an expense is for
"medical care" is based on all the relevant
facts and circumstances. To be an expense for medical
care, the expense has to be primarily for the prevention
or alleviation of a physical or mental defect or
illness. The determination often hangs on the word
"primarily."
Who
decides whether the money I’m spending from
my HSA is for a “qualified medical expense?”
You are responsible for that decision, and therefore
should familiarize yourself with what qualified
medical expenses are (as partially defined in IRS
Publication 502) and also keep your receipts in
case you need to defend your expenditures or decisions
during an audit.
What
happens if I don’t use the money in the HSA
for medical expenses?
If the money is used for other than qualified medical
expenses, the expenditure will be taxed and, for
individuals who are not disabled or over age 65,
subject to a 10% tax penalty.
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Are
dental and vision care qualified medical expenses
under a Health Savings Account?
Yes, as long as these are deductible under the current
rules. For example, cosmetic procedures, like cosmetic
dentistry, would not be considered qualified medical
expenses.
Can
I use the money in my HSA to pay for medical care
for a family member?
Yes, you may withdraw funds to pay for the qualified
medical expenses of yourself, your spouse or a dependent
without tax penalty. This is one of the great
advantages of HSAs.
Can
I use my HSA to pay for medical services provided
in other countries?
Yes.
Can
I pay my health insurance premiums with an HSA?
You can only use your HSA to pay health insurance
premiums if you are collecting Federal or State
unemployment benefits, or you have COBRA continuation
coverage through a former employer.
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Can
I purchase long-term care insurance with money from
my HSA?
Yes, if you have tax-qualified long-term care insurance.
However, the amount considered a qualified medical
expense depends on your age. See IRS Publication
502 for the amounts deductable by age.
I
have an HSA but no longer have HDHP coverage. Can
I still use the money that is already in the HSA
for medical expenses tax-free?
Once funds are deposited into the HSA, the account
can be used to pay for qualified medical expenses
tax-free, even if you no longer have HDHP coverage.
The funds in your account roll over automatically
each year and remain indefinitely until used.
There is no time limit on using the funds.
What
happens to the money in my HSA if I lose my HDHP
coverage?
Funds deposited into your HSA remain in your account
and automatically roll over from one year to the
next. You may continue to use the HSA funds
for qualified medical expenses. You are no
longer eligible to contribute to an HSA for months
that you are not an eligible individual because
you are not covered by an HDHP. If you have
coverage by an HDHP for less than a year, the annual
maximum contribution is reduced; if you made a contribution
to your HSA for the year based on a full year’s
coverage by the HDHP, you will need to withdraw
some of the contribution to avoid the tax on excess
HSA contributions. If you regain HDHP coverage
at a later date, you can begin making contributions
to your HSA again.
Do
unused funds in a Health Savings Account roll over
year after year?
Yes, the unused balance in a Health Savings Account
automatically rolls over year after year. You won’t
lose your money if you don’t spend it within
the year.
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What
happens to the money in a Health Savings Account
after you turn age 65?
You can continue to use your account tax-free for
out-of-pocket health expenses. When you enroll
in Medicare, you can use your account to pay Medicare
premiums, deductibles, copays, and coinsurance under
any part of Medicare. If you have retiree
health benefits through your former employer, you
can also use your account to pay for your share
of retiree medical insurance premiums. The
one expense you cannot use your account for is to
purchase a Medicare supplemental insurance or “Medigap”
policy.
Once you turn age 65, you can also
use your account to pay for things other than medical
expenses. If used for other expenses, the
amount withdrawn will be taxable as income but will
not be subject to any other penalties. Individuals
under age 65 who use their accounts for non-medical
expenses must pay income tax and a 10% penalty on
the amount withdrawn.
Can
I use my HSA to pay for medical expenses incurred
before I set up my account?
No. You cannot reimburse qualified medical
expenses incurred before your account is established.
We recommend you establish your account as soon
as possible.
Who
will be the “bookkeeper” for my HSA?
It is your responsibility to keep track of your
deposits and expenditures and keep all of your receipts.
If you run out of HSA funds (and therefore need
to use your HDHP), you may need to send those receipts
to your insurer..
How
do I use my HSA to pay my physician when I’m
at the physician’s office?
If you are still covered by your HDHP and have not
met your policy deductible, you will be responsible
for 100% of the amount agreed to be paid by your
insurance policy to the physician. Your physician
may ask you to pay for the services provided before
you leave the office. If your HSA custodian
has provided you with a checkbook or debit card,
you can pay your physician directly from the account.
If the custodian does not offer these features,
you can pay the physician with your own money and
reimburse yourself for the expense from the account
after your visit.
If your physician does not ask for
payment at the time of service, the physician will
probably submit a claim to your insurance company,
and the insurance company will apply any discounts
based on their contract with the physician.
You should then receive an "Explanation of Benefits"
from your insurance plan stating how much the negotiated
payment amount is, and that you are responsible for
100% of this negotiated amount. If you have
not already made any payment to the physician for
the services provided, the physician may then send
you a bill for payment.
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