Healthcare is expensive. Manage your costs strategically with a tax-advantaged health savings account (HSA). An HSA triples your tax benefits: tax-deductible contributions, tax-free growth and non-taxable withdrawals for qualified expenses. Combined with a high-deductible health plan (HDHP), an HSA can help pay for everything from routine visits and lab tests to surgery for you, your spouse and eligible dependents. You can also use it for vision or dental care and even long-term care insurance premiums and services. And once you open an account, you have it for life – even if you leave the workforce.
Medical expenses are the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body, including payments for:
Medical care expenses must be directly related to alleviating or preventing a physical or mental defect or illness. Important reminders about qualified medical expenses:
Note: As the HSA owner, you are ultimately responsible for determining whether a health care expense is eligible for reimbursement and must pay income tax and a 20 percent penalty on any amount applied to a non-qualified medical expense. Penalty tax does not apply to payments made after your death or disability or after age 65. HSAs cannot be used to pay for medical expenses incurred before the account was established.
Maximize your contributions to receive the maximum tax deduction. Any eligible individual can contribute. For an employee’s HSA, the employee, employer or both may contribute in the same year. For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. Family members or any other person may also make contributions on behalf of an eligible individual.
You can keep track of your HSA funds via:
To qualify for an HSA, you must meet the following requirements:
*Under the last-month rule, you are considered an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse’s coverage does not cover you. If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. This is true even if the other person does not actually claim your exemption. Each eligible spouse who wants an HSA must open a separate HSA. You cannot have a joint HSA.
No, any money contributed and not used will remain in the account. The funds belong to the HSA owner regardless of use or employment status. Any funds remaining at the end of the year simply roll over to the next year.
Reduces out-of-pocket high-deductible health plan costs.
Tax-deductible contributions, tax-free growth and non-taxable withdrawals.
Yours for a lifetime even if you change employers or leave the workforce.
Any funds remaining at year-end roll over to the next year.