You do not need to be a Greys Anatomy patient to receive the benefits of a Health Savings account.gray … [+]
I recently purchased a sauna and was surprised to see a note from several sellers stating, “Your purchase may be eligible for an HSA.” That got me thinking. What other purchases may be eligible?
What is an HSA?
A health savings account allows you to save money for a variety of medical expenses. You contribute funds to his HSA on a pre-tax basis (you don’t have to pay income taxes on the contributions each year). From there, you can use your HSA funds to pay for (or reimburse yourself for) medical expenses. HSA funds can be used at any time, but you can only contribute to a health savings account if you have an HSA-eligible health plan called a High Deductible Health Plan (HDHP).
If you’re not using your HSA funds, you can also earn interest on your balance or invest your HSA balance. If you ultimately use the funds for qualified medical expenses, any interest or investment gains will be tax-free.
Prescriptions and doctor visits are obvious, but there may be other medical expenses as well. … [+]
What are HSA-eligible expenses?
A variety of things can be considered expenses for HSA reimbursement. Some are obvious, such as medical copays, dental cleanings, prescriptions, day care, and au pair services. There are also less obvious ones, such as over-the-counter medications and sleeping pills. Surprisingly, HSA funds cannot pay for health insurance premiums. As an exception, Medicare premiums are subject to his HSA reimbursement.
Related: How to avoid medical expenses from ruining your retirement
What are medical savings accounts typically used for?
For many people, it’s easy to max out your HSA balance as you incur regular medical, dental, or vision expenses. Think about teeth cleanings, annual checkups, and all the tests and eyeglass and contact adjustments that come with it.
People with large HSA balances have an even longer list of reimbursed medical expenses. Health-related travel expenses may also be covered. A friend recently came from Los Angeles to see a specialist at the Mayo Clinic. He could be compensated for clinic treatment, flights, hotels, meals and Uber fares.
Uber
If medically necessary, flights and hotels may be eligible expenses for an HSA.
What can I not use my HSA funds for?
As you can see from the list of HSA-eligible medical expenses below, not everything health-related will be reimbursed from your health savings account. I’m not going to list everything you can’t use your HSA funds for. Nevertheless, this list would include costs that do not significantly promote the healthy functioning of the body or are specifically related to the prevention or treatment of illness or disease. Common examples include supplements and weight loss programs that are not specifically prescribed by your doctor.
Should you spend your HSA or invest it?
When Should You Use Vs to Save HSA Funds?
If you’re in good financial shape, consider investing your HSA contributions for the long term. By leaving your funds invested, you can benefit from compound interest and pay off your current medical expenses yourself at a later date.
most of me financial planning Customers can treat their HSAs as additional retirement accounts, turning them into a virtually tax-free source of income to pay for future (or past) medical expenses. Contribute as much as you can (ideally the maximum) to her HSA each year, invest that money, and set up a file on your computer (or in the cloud) to keep receipts for all your medical expenses. He saves it in one place. When she needs the money (or in retirement), she’ll reimburse herself for years of medical expenses from her accumulated HSA funds.
If you’re drowning in credit card debt, your strategy may be different. Contribute to your HSA tax credit. However, you may want to reimburse yourself for medical expenses when they occur. There’s no reason to leave these medical bills on a credit card with more than 20% interest.
HSA Expense Eligibility List
As a financial planner, I strive to help my clients make the most of the investments, retirement, HSAs, and other tax-advantaged accounts available to them. Keep reading as we share a long list of medical expenses that your HSA should reimburse.
Rules and regulations are subject to change, so please refer to your plan’s specific reimbursable expense guidelines. How your purchase is described or coded can affect whether your HSA refunds you. For example, let’s say you pay for a prescription at a pharmacy, but the only proof of purchase is a credit card bill with the pharmacy’s name on it. In that case, you probably don’t have enough evidence to prove the expenses to be reimbursed. On the other hand, you’ll be better off if you have a detailed receipt with your prescription’s name on it, or at least says “Pharmacy.”
A visit to a chiropractor is an example of an HSA-eligible expense.
Common HSA medical expenses that are reimbursed
Various medical expenses are reimbursed from your HSA balance. This list includes some of the most common reimbursable medical savings account costs.
- acupuncture
- artificial limb
- contraception
- Blood sugar test kit for diabetics
- colonoscopy
- chiropractor
- contact lenses and solutions
- New coronavirus infection (COVID-19) testing
- crutch
- dental visit
- Doctor’s examination and self-pay
- Target nursing care insurance premiums
- glasses
- feminine hygiene products
- Improving fertility (including in vitro fertilization)
- influenza vaccination
- guide dog
- hearing aid
- infertility treatment
- insulin
- lab fee
- Nursing care service
- medical alert bracelet
- medical record fee
- Orthodontics
- orthodontic inserts
- Over-the-counter medicines and medicines (see below for details)
- Personal protective equipment (PPE) such as masks and hand sanitizer
- physical therapy
- prescription
- mental health care
- psychologist
- rehabilitation
- Special education expenses, including instruction for children with learning disabilities due to intellectual disability (recommended by a doctor)
- speech therapy
- Smoking cessation program (including nicotine gum or patch if prescribed)
- surgery
- vaccine
- vasectomy
- Vision test
- walker, cane
- wheelchair
HSA Reimbursable Over-the-Counter Drugs
Many illnesses can be treated with over-the-counter medications. Here are some items that an HSA should reimburse without requiring a prescription.
- acid regulator
- acne medicine
- allergy medicine
- antidiarrheal medicine
- cold and flu medicine
- eye drops
- feminine products
- hemorrhoid treatment
- Laxatives or stool softeners
- motion sickness medicine
- nasal spray
- Ointments for cuts, burns, and rashes
- Painkillers such as aspirin and ibuprofen
- medicine for sinusitis
- sleep aids
Services that may be covered by a completed Medical Necessity Letter
If you have a completed letter of medical necessity from your doctor, the list of medical expenses that will be reimbursed by your HSA is even longer..
- Weight Loss Programs – Reimbursable only if intended to treat a specific disease.
- Compression wear – think anti-embolism socks and hoses. Often worn when flying long distances.
- cardiopulmonary resuscitation training
- Special home renovations – especially for people with disabilities.
Can I use my HSA for medical expenses for my spouse or dependents?
Yes, you can pay for your spouse’s or dependent’s qualified medical expenses with an HSA..
2024 HSA contribution limits
Health savings account contribution limits for 2024 are $4,150 for individuals and $8,300 for families. People over the age of 55 can make an additional contribution of $1,000 to her.
If you contribute $8,300 a year for 20 years (assuming a 10% return on investment), you’ll need about $475,000 to pay for your medical bills. Keep in mind that this could be medical expenses you’ve already incurred or will incur in the future.
Related: Are you on track to achieve the retirement you want?
