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What Can You Buy With Your HSA?

Lively · July 12, 2018 · 2 min read

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A key value of HSAs are tax-free saving and tax-free spending. With one big caveat – all HSA spending, must be used for qualified out-of-pocket medical expenses in order for it to be tax free. So what exactly qualifies under IRS guidelines?

Qualified HSA Expenses

Qualified HSA expenses are set and regularly updated by the IRS. You can see the full qualified HSA expense list here. In addition to everyday expenses, some extra HSA expenses are eligible if prescribed by a doctor or with a note of medical necessity. Keep this in mind as you review the list.

Non-Qualified HSA Expense Penalty

What happens if you spend your tax-free HSA money on non-qualified HSA expenses? The long and short of it is, if you are audited by the IRS, you can incur a 20% penalty plus income taxes. Because these expenses are regulated by the IRS, it’s up to you to stay compliant. Not only this year by from the time you opened your HSA.

In order to substantiate a qualified medical expense purchase to the IRS in case of an audit, you will need documentation (a copy of the receipt of expense). At Lively, we give you the ability to store various documents tied to an expense, for all of those just in case situations.

Your 65th Birthday Present

It turns out there is one more exception. As a birthday present from the IRS, you can use your HSA money for anything when you turn 65, not just qualified medical expenses. You just pay ordinary income taxes at that time – no penalty! In that sense, your HSA funds transform after you turn 65 and can be used just like a 401(k) or IRA. Keep this in mind as you balance your HSA spending vs. savings. There is additional tax-savings value once you turn 65!

Do your homework and ensure you HSA spending is IRS complaint. This will ensure you aren’t stuck with an unexpected IRS audit and penalties. It also might help you save money on medical expenses that you didn’t think were eligible. The more you know here, the more opportunities you have to save.

If you need more help with health account decisions, check out our blog. We will make you a healthcare benefits expert in no time, without any extra work or effort on your end.

Lively

Lively

Lively is the modern HSA experience built for—and by—those seeking stability in the ever-shifting healthcare landscape. By harnessing modern innovation and deep industry expertise, Lively is committed to bridging today’s savings with tomorrow’s unknowns. Unlike traditional institutions hindered by bureaucracy, Lively’s commitment extends beyond initial set up to providing dedicated, ongoing support and education for every step. So each HSA can reach its maximum potential with minimal headache.

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Benefits

2023 and 2024 HSA Maximum Contribution Limits

Lively · May 16, 2023 · 3 min read

On May 16, 2023 the Internal Revenue Service announced the HSA contribution limits for 2024. For 2024 HSA-eligible account holders are allowed to contribute: $4,150 for individual coverage and $8,300 for family coverage. If you are 55 years or older, you’re still eligible to contribute an extra $1,000 catch-up contribution.

comparing hsa versus fsa

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.

Benefits of HSA employer matching

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.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

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