The Lively Blog
SIGN UP FOR OUR
Newsletter
Stay up to date on the latest news delivered straight to your inbox
The Short Term Benefits of a Health Savings Account (HSA)
Vicky Warren · March 3, 2020 · 5 min read
Health Saving Accounts - known as HSAs - offer amazing benefits. Many financial advisors tout the triple tax advantages they offer and the fact that can use them as an additional retirement account.
HSAs are also good for the short term; you can use HSA funds for medical costs you have right now. Qualified medical expenses like dental and optometry expenses, big purchases like Lasik eye surgery and teeth straightening, and smaller medical needs like eyeglasses are all HSA-eligible.
Let’s discuss how you can use your HSA right now.
What is an HSA?
A Health Savings Account (HSA) is an account that individuals covered under a high-deductible health plan (HDHP) can use to save for qualified medical expenses.
In addition, HSAs offer the following triple tax advantages:
Contributions are made pre-tax, lowering your taxable income
Interest earned in the account is tax-free
Funds withdrawn for qualified medical expenses are tax-free
Do You Qualify for an HSA?
If you’re enrolled in a high-deductible health plan (HDHP), you’ll likely qualify for an HSA. However, not all HDHPs qualify, so look for plans tagged as “HSA eligible.”
In 2020, HSA eligible plans have a minimum deductible of $1,400 for individuals and $2,800 for families. They also require an out-of-pocket maximum of $6,900 for individuals and $13,800 for families.
How HSAs Work
Some companies offer HSAs for those who have a high deductible health plan. If your company doesn’t, you can open your own HSA account, as long as your policy is “HSA-eligible”.
You decide how much to contribute each year, though you can’t exceed the maximum contribution limits. For 2020, the HSA limits are $3,550 for individuals and $7,100 for families. For 2021, the HSA contribution limits are $3,600 for individuals and $7,200 for families.
Once established, you’ll get a debit card or checks linked to your HSA. You can use those funds on qualified medical expenses.
Your HSA balance rolls over every year, so you don’t have to worry about the “use-it-or-lose-it” concern of other types of accounts. Once you turn 55, you can contribute an additional $1,000 above the yearly maximum as a “catch-up contribution.”
When you turn 65 and enroll in Medicare, you can no longer make contributions to an HSA, though, you can use the funds for qualified medical expenses.
If you want to use HSA funds for non-qualified expenses prior to age 65, you’ll have to pay income tax and a penalty on the withdrawn money. After 65, you’ll only pay income tax on money used for non-qualified medical expenses - the penalty no longer applies.
What are the Short Term Benefits of an HSA?
There are many medical expenses you can use your HSA funds for. For a complete listing, check out IRS Publication 502.
Here are some items you can use your HSA funds on now:
Therapeutic Services
Massage Therapy (with letter of medical necessity)
Chiropractic fees
Acupuncture
Psychological counseling
Addiction treatment
Assistive devices like hearing aids, home adaptations for the disabled, and even to purchase a guide dog are HSA eligible
Dietary Needs
You can’t use your HSA funds to buy everyday groceries or at your favorite restaurant - they are considered food normally consumed to satisfy nutritional needs.
However, there are certain types of food an HSA will cover as long as the following criteria are met:
The food doesn’t satisfy normal nutritional needs
The food alleviates or treats an illness, and
The need for the food is substantiated by a physician
Vitamins and supplements may be covered if recommended by a physician for the treatment of specific medical conditions.
Ancillary Health Needs
Your HSA funds can be used to help pay for several ancillary health needs you may have:
Optometry
You can use your HSA funds for eye exams. Plan to have an eye exam every two years to keep on top of eye health. If you end up needing vision correction, glasses, contacts and even laser eye surgery such as LASIK are HSA eligible.
Dental
You can include medical expenses related to the prevention and alleviation of dental disease. Common dental procedures that are HSA-eligible include:
Fillings
Root canals
Extractions
Crowns
Dentures
Bonding
Other dental services like check-ups and dental cleanings are covered under HSAs. Some services may include a co-payment, so check with your insurance provider to figure out what you will have to pay out-of-pocket.
Dental coverage can get a bit confusing. Here are a few items not covered by HSAs:
Toothpaste, toothbrushes, floss, and mouthwash
Teeth-whitening (it’s considered cosmetic, therefore not HSA eligible)
Seasonal Health Needs
Sunscreen:
The American Academy of Dermatology recommends sunscreens that are water-resistant, offer broad-spectrum protection (UVA and UVB) with at least 30 SPF. HSAs cover all types of over-the-counter sunscreens. Physical and chemical sunscreens are eligible.
First Aid:
It’s always a good idea to have a First Aid kit around. You can buy a pre-made kit or items to assemble your own with HSA funds.
Allergies:
Allergy Testing is HSA eligible. The three tests typically used for allergy testing include the skin prick test, skin injection test, and patch testing.
Prescription and over-the-counter allergy medication are HSA eligible. Be sure to keep the documents to prove the medical necessity for prescription medications.
There are several other seasonal health needs covered under HSAs such as: Lip balm
Aloe vera
Prescription sunglasses
Athletic tape
And many more…
You can view more items that you can use with your HSA on Lively's Eligibility List.
HSAs offer short term benefits to help you live your best life right now, as well as build a nice cushion for future medical costs.
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.
SIGN UP FOR OUR
Newsletter
Stay up to date on the latest news delivered straight to your inbox