02 Jun HSA 101
If you or someone you know has been given the option of choosing an HSA (health savings account) for their employee benefit package this might help you understand what an HSA is all about!
First, a health savings account (HSA) is a tax advantages account that allows you to pay for medical expenses or save and invest that money income tax free! You save on your taxes in three ways.
• The money put into your HSA account is done on a pre-tax basis through your payroll contributions thus lowering your taxable income.
• You can earn interest on your HSA savings account and your earnings are not currently taxed by the IRS.
• You can use your HSA money to pay qualified medical expenses all income tax free.
There is no minimum contribution required. You can even change your contribution whenever you like any time of the year. This can help with your personal budget. Some employers will make contributions to your HSA as well.
To qualify for a health savings account, you cannot be claimed as a dependent on someone else’s tax return. You must also have a high deductible health plan (HDHP) and you cannot have any other coverage, including Medicare or military health benefits.
The great thing about an HSA is it will be yours no matter where you go. It is like a traditional savings account in that even if you change jobs, move, or retire your funds will never expire!
Whether you use your HSA funds for medical expenses or let them roll over, it is very important to familiarize yourself with the items and services that are eligible for tax savings. These items include prescriptions, doctor visit co pays, dental and vision needs, and health insurance deductibles. Usually included are also many (OTC) over the counter treatments such as substance abuse treatment, fertility treatment, hearing aids, immunization, medical testing devices, physical therapy, pain relievers and cold medicine, plus hundreds more.
It is easy to use your HSA funds once you have set up your account with the bank. You will receive a payment card to use for qualifying expenses and the funds will automatically be deducted from your account. It’s recommended to keep all of your receipts and check the balance of your funds.
If you have further questions about a health savings account and how to use it give us a call and we can help.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your medical professional or legal representative for information specific to your needs.
Source: Optimum Financial