Health Savings Accounts (HSA) are on the rise again. More companies are also allowing their employees to participate in HSA's. To understand HSA's and how they work, we recommend reviewing that information online. The purpose of this article is to explain what you can do with the money in your Health Savings Account..
You can make a contribution into your HSA each year that you are eligible. For 2008, you can contribute up to $2900 for single coverage and $5800 if you elect family coverage.Individuals over age 55 can make an additional contribution of $900. These amounts are adjusted annually for inflation.
Your HSA account is usually through a bank, credit union or financial services company. The money within your account can be invested and grow tax deferred.
You can use the money within your account to pay for any "Qualified Medical Expenses" permitted under the federal tax code.The most common being; most medical care and services, dental and vision, and medications, including over the counter drugs such as aspirin. Your HSA most likely has a Debit Card to use for these expenses.
Most people do not understand that you can NOT use this money to pay for your health insurance premiums. There are a few "special circumstances", that allow you to pay premiums, including periods of when receiving unemployment benefits, COBRA continuation and when paying for certain Medicare expenses. You can however deduct Long Term Care Premiums, provided the plan is "qualified". Review your policy today.
This money can be used to pay for your medical expenses and all expenses incurred by your dependent children or spouse.
There are penalties for using funds for any other expenses that are not considered "qualified". For example you can not use the money for Cosmetic Surgery, paying for Supplemental Medicare premiums or other non medical expenses.
To learn more about the Health Savings Accounts and how they work, visit the QuoteBroker website.
** This information was intended to be educational and you should always consult your insurance, tax or legal representative to discuss how an HSA applies to your situation. Additional information can be located at the Department of Treasury website.