Few people who have a Health Savings Account really take advantage of all the tax-saving benefits these plans offer. One thing that anyone with a Health Savings Account should be aware of is all of the expenses that can legally be paid for from your account with pre-tax dollars.
Qualified Medical Expenses
The main purpose of your HSA is to enable you to pay for qualified medical expenses with tax-free dollars. Qualified medical expenses are defined under Section 213 of the IRS Code (See IRS Publication 502: Medical and Dental Expenses). Most people remember to pay for doctor visits and prescription drugs from their HSA (or save the receipts and reimburse themselves later), but there are many medical expenses that people simply pay for, without realizing that because they own an HSA the expense is tax deductible. These are the most common:
Over-the-counter medications. Remember, your medicine does not necessarily have to be prescribed to be considered a qualified medical expense. Any time you buy a bottle of aspirin, cough syrup, bandages, or zit medicine for your teenager - save the receipt, so you can reimburse yourself from your HSA.
Dental expenses. Dental fees are typically the most expensive item that people forget to pay for from their HSA. From cleanings, to crowns, to dentures, all of your medically necessary dental work is eligible to be paid from your HSA.
Eye glasses and contacts. Annual eye exams along with prescription glasses, contact lenses, and other prescription eye glass expenses can be paid from your HSA tax-free. Also, remember that prescription sunglasses are considered to be a qualified medical expense.
Physical therapy. Most individual and family health insurance plans have very limited coverage for physical therapy. So you can pay for those expenses out of out of your available HSA funds.
Medical massage therapy. Yes, you can use funds from your HSA to pay for a massage, as long as your health care practitioner recommends it as treatment for a particular health condition.
Chiropractor visits. Remember that your HSA can be used for medically necessary expenses. If you go to your chiropractor due to a particular injury or functional problem, it is a qualified expense. The chiropractor's charges would NOT be considered eligible if you are getting adjustments for general health maintenance.
Mental Therapy
In some circles, seeing a therapist is reason for embarrassment, whereas in other parts of the country people brag about seeing their therapists. The reality is that mental therapy should be neither a symbol of shame nor a status symbol - it is simply another mode of treatment that can help people live healthier and happier lives.
Psychiatry, psychology, psychoanalysis, and psychotherapy - all of these modes of treatment can be paid for from your HSA. Keep in mind that qualified expenses are those that pay for treatment or prevention of a medical condition. If you are seeing a therapist strictly in order to save your marriage or improve your business skills, these would not be qualifying expenses.
Alternative Medicine
More and more people are disillusioned with the way conventional medicine is practiced. The focus often seems to be on treating symptoms rather than reaching the root cause. Many physicians are very quick to prescribe the latest drug, when less expensive, safer, and often more effective natural remedies may work better.
However, the people who do rely on alternative medical treatments rarely receive reimbursement from their health insurance for these expenses. This is one of the reasons that HSA plans have become so popular among people who do favor natural and/or alternative medical treatments. Here is just a very small sampling of the types of treatment that would be an HSA-qualified expense:
Acupuncture. Some think the beneficial results of acupuncture are strictly due to the placebo effect. My veterinarian wife would tell you differently. Though she mostly practices conventional veterinary medicine, she does do a good bit of acupuncture on dogs and cats, and gets some amazing results.
Homeopathy. Though controversial, approximately one out of 50 Americans currently uses homeopathy. Whether using the services of a professional, or simply buying homeopathic remedies from the natural food store, remember that these expenses can be paid for from your HSA.
Traditional Chinese Medicine. Chinese medicine has been practiced for thousands of years, and is becoming ever more popular in the United States. Of course, treatment modalities that originated in other countries, such as Ayurveda (from India), would also be considered a qualified expense.
Faith healing, shamanism, energy medicine, and other (perhaps) far out stuff. Yep, almost any type of treatment could be considered an eligible expense. Keep in mind that the procedure must be related to the treatment or prevention of a specific health condition. Services designed to raise your chi, balance your chakras, or strengthen your aura might be more than the IRS will allow.
Every Dollar Counts
Every medical expense you incurred counts, so don’t forget to save your receipts. If you don’t, it’s like paying an extra 25% each time. Even some retailers like Target are starting to mark on your receipts which items are health related. That should make it even easier to get every tax break you deserve.
Learn About Medicare Advantage Plans
The Original Medicare Plan is a fee-for-service option that offers coverage for most health care services and only some prescription drugs. The insured can only go to medical facilities and see doctors that accept Medicare insurance. The individual being covered receives a red, white or blue Medicare card to present to the physician.
Learn How to Beat the Health Savings Account Tax-Savings Deadline
Individuals and families must have their HSA-qualified health insurance coverage in force no later than December 1st in order to qualify for a current year tax-deductible contribution to a Health Savings Account. A family may contribute up to $5,800 in pre-tax dollars to their Health Savings Account, which then grows tax deferred and can be used to pay future medical expenses, tax-free.
How to Use Your Health Savings Account to Slow Down Your AGEing Process
With the skyrocketing cost of health insurance, individuals and families are always looking for ways to lower their health insurance costs. Learn how you can slow down your ageing process at the same time you are saving money on your health insurance by using a Health Savings Account to your advantage.
