Hello! This is the final piece of the Health Savings Account (HSA) blog topics. The final part of this process is the Advocate. Healthy Solutions Insurance wants to focus on you and your needs, and as always be your Advocate in the health care industry.
Â When can I use my funds in an HSA?
You may use your HSA to pay for qualified medical care expenses. The medical care can be for you, your spouse and your tax dependents. This is true even if you have a self-only HDHP. You can use your HSA funds when you have to pay for eligible expenses out-of-pocket.
This includes what you pay for deductibles, co-insurance and copays.
You can also use your HSA funds to pay for some insurance premiums.
- Long-term care (LTC) insurance
- COBRA health care continuation
- Health care coverage while receiving unemployment benefits
- Medicare and other health insurance if age 65 and older, not including Medicare supplement
Check out the IRS’s 2015 Allowable Expenses for further examples of what qualifies as a qualified expense.
What if my expense is not a qualified medical expense?
You can use your HSA funds for a non-qualified medical expense; however, you will have to pay income taxes on that amount. You may also have to pay a 20% tax penalty.
- If you are age 65 or older or disabled at the time you use your HSA funds for a non-qualified medical expense, you will not have to pay the 20% penalty. You would still have to pay income taxes on this amount.
Check out the IRS’s 2015 Allowable Expenses for further clarification on what would not count as a medical expense to be paid for by an HSA.
Very important tip: Keep your receipts!
You must keep all your receipts showing how you used your HSA funds. There are two key reasons to do this. One is to show that you used your funds for qualified medical expenses. The other is in case you are audited by the IRS.