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5 Twists On Health Savings Accounts You May Not Know
Lively · February 23, 2017 · 4 min read
Do you have a Health Savings Account (HSA)? Or maybe you are thinking about getting one? How would you like to test your knowledge about HSAs? Here are a few Health Savings Accounts tips that may have escaped your detection.
HSA Tips
#1 – You can cash in later
You know HSAs help pay for covered healthcare expenses. Right? But, did you know there is no time limit on getting reimbursed? As long as you incurred the expenses after you set up your account, you can get your tax-free reimbursement any time in the future. Seriously, any time. Also, unlike a 401k, there is no mandatory distributions after a set age. If you never want to make distributions, you don’t have to. Here’s the catch. You have to keep those receipts. Hey, it is IRS-governed, after all.
#2 – HSAs cover more than the typical medical plan
Want to banish your eyeglasses? Wish you could get help with paying for LASIK surgery? HSAs can help. IRS-qualified healthcare expenses include more than your average medical plan, like dental and vision care (including LASIK surgery, even if you don’t have a dental or vision plan).
Hearing aids are another big item that most medical plans don’t cover but they are qualified healthcare expenses under your HSA. You can check out the IRS site for the details. Lots and lots of details.
#3 – After age 65, you are penalty-free for non-medical expenses
“What!!?? Are you serious?” Yep! You can use your HSA savings for non-medical expenses. However, there are consequences (bet you expected that).
The IRS taxes funds withdrawn for non-medical expenses – AND –
You get hit with a 20% penalty
But wait. There is a very BIG exception. If you already celebrated your 65thbirthday (Happy birthday!), you can withdraw the money for non-medical expenses with no penalty.
You WILL be taxed on withdrawals used for non-medical expenses – no matter your senior citizen status.
#4 – Your HSA stays an HSA if your spouse inherits it
What happens if you still have your HSA when you pass away? If you named your spouse as your beneficiary, your spouse takes over the HSA.
He or she is subject to the same HSA rules and regulations.
That includes receiving tax-free distributions for qualified healthcare expenses.
If you did not name a beneficiary or named someone other than your spouse, the HSA is no longer an HSA but taxable income for the person inheriting the account. By the way, some states make you have the consent of your spouse if you try to do an end-run around naming your spouse as a beneficiary.
#5 – You can keep your HSA even when changing medical plans
Most HSA account holders know the account is theirs to keep. Even if they change jobs, they take the HSA with them.
But what happens if you change your medical plan?
What happens if the new plan is not a qualified High-Deductible Health Plan (HDHP)?
An HDHP is a requirement to set up and contribute to an HSA. But, did you know if you change to a non-HDHP, you can still use your established HSA?
That’s right. You can take tax-free withdrawals for reimbursing qualified healthcare expenses. You just won’t be able to make new contributions to your savings plan. How did you do?
Disclaimer: As always, the information provided is for your general background only and is not intended to constitute legal or tax advice as to your specific circumstances. We recommend you review legislation with legal counsel and visit your tax advisor for tax assistance and advice. We also recommend that you optimize your healthcare spending, maximize your savings, and better your livelihood!
Benefits
2024 and 2025 HSA Maximum Contribution Limits
Lively · May 9, 2024 · 3 min read
On May 9, 2024 the Internal Revenue Service announced the HSA contribution limits for 2025. For 2025 HSA-eligible account holders are allowed to contribute: $4,300 for individual coverage and $8,500 for family coverage. If you are 55 years or older, you’re still eligible to contribute an extra $1,000 catch-up contribution.
Benefits
What is the Difference Between a Flexible Spending Account and a Health Savings Account?
Lauren Hargrave · February 9, 2024 · 12 min read
A Health Savings Account (HSA) and Healthcare Flexible Spending Account (FSA) provide up to 30% savings on out-of-pocket healthcare expenses. That’s good news. Except you can’t contribute to an HSA and Healthcare FSA at the same time. So what if your employer offers both benefits? How do you choose which account type is best for you? Let’s explore the advantages of each to help you decide which wins in HSA vs FSA.
Health Savings Accounts
Ways Health Savings Account Matching Benefits Employers
Lauren Hargrave · October 13, 2023 · 7 min read
Employers need employees to adopt and engage with their benefits and one way to encourage employees to adopt and contribute to (i.e. engage with) an HSA, is for employers to match employees’ contributions.
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