![]() ![]() Note: You can’t have an HSA of your own if you’re a dependent on someone else’s tax return. Otherwise, you can set up an HSA at most banks or credit unions. Your employer may set one up through your insurance company. ![]() To qualify for an HSA, you need to be enrolled in a High Deductible Health Plan (HDHP), and that deductible must be at least $1,400 for an individual, or at least $2,800 for families. What kind of insurance plan do I need to have to qualify for an HSA? Note: If you pay for a qualifying medical expense from an HSA, you can’t also claim the expense as a medical deduction on your return. You don’t need to submit any of the receipts when you e-file your return, but it’s a good idea to keep the receipts in case the IRS questions an expense. Keep receipts for any expense you use your HSA for, including doctor co-pays, prescriptions, and medical supplies. Over-the-Counter Medications – Because of the CARES Act, you can now use HSA funds to pay for OTC meds like painkillers, fever reducers, and more.Professional services, medical treatments, and laboratory tests.Some HSAs provide paper checks and online bill paying, too.Īs long as your insurance doesn’t cover them OR reimburse you, qualifying expenses are the same as those qualifying for the medical expense deduction, like: You can use an HSA for qualifying medical expenses, and most HSAs provide a debit card for easy use. What sort of medical expenses can I use my HSA for? Not claiming the non-qualifying expenses may lead to an audit, and you’ll be subject to penalties and fines. You must self-report any non-qualifying purchases on the Health Savings Account screen. Careful: Whatever your maximum is, if you exceed it, a 6% penalty will be assessed. If you’re 55 years or older, you may contribute up to another $1,000 as a catch-up contribution, whether you have single or family coverage. If your insurance plan covers you and your family, you or your employer may contribute up to $7,200. If you’re the only person your insurance covers, you and/or your employer could contribute up to $3,600 annually. You, your employer, or both can contribute to an HSA, but there are maximums for allowable contributions. Who can contribute to my HSA and how much? If you’re healthy and don’t use much from your HSA, you can withdraw from your HSA penalty-free after you turn 65 – even for non-qualifying medical expenses.If you don’t use all the money up in the year, it rolls over from year to year and continues earning interest. There’s no “use-it-or-lose-it” rule, like with an FSA.What are the tax benefits of having an HSA?īesides being able to set aside money tax-free, HSAs have other tax benefits: Contributions are tax-free, and you’re not taxed on money used for qualifying medical expenses, either.Īn HSA is also a great tool for retirement savings, even if those savings are not for medical expenses post-retirement. Updated for filing 2021 tax returns How does my Health Savings Account affect my taxes?Ī Health Savings Account (HSA) is a way to save money to pay for medical expenses and costs. ![]()
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