for some people a Heath savings account, or HSA, is a great way to take control of medical costs. You (and sometimes your employer) deposit money in your account each month and that these funds are used to pay your fees in cooperation with a higher than an HMO or PPO deductible. When used to pay eligible medical expenses, the money in your HSA is also tax-free.
year HSA, should not be confused with a FSA or flexible spending account allows any unused money at the end of the year to be carried forward to the following year. You don't lose if you do not use so there is no rush, as with a FSA, spend your HSA funds on a specific date.
year HSA has specific guidelines for what you can spend your money on. Medical expenses qualified as prescriptions and doctor visits are the most obvious use for your HSA, but did you know that the guidelines allow for other, more conventional ways to use your HSA? Here are three examples of ways quite acceptable, but unconventional to spend your HSA.
needles in your skin and kneading Muscles
Let's say your neck has been, well, a pain in the neck . you see your doctor and they tell you that a therapeutic massage on a semi-regular basis would help. According to Aetna, qualified medical expenses is defined as "amount paid for the diagnosis, treatment, mitigation, treatment or prevention of the disease and treatments affecting part or function of the body. In short, if it allows you to treat what is wrong or help you to get better, it's qualified medical expenses.
your doctor, in his infinite wisdom, prescribed a massage for your pain in the neck. It is covered. It's true. You and your neck to be treated for a therapeutic and relaxing session that hopefully leaves you feeling rejuvenated.
just like massage is covered, so is acupuncture. It's another example of qualified medical expenses. If your doctor prescribed, whether needles in the skin or a masseuse working the muscles knotted below, it is covered as part of your HSA.
Querenovations
If you or a loved one have medical problems that require changes to the home, it qualifies as a medical expense. A change of House can be as small as a handle for your bath or shower, or something as big as remodeling your bathroom and doors to accommodate a wheelchair.
when it comes to the quality of life and mobility in and around the House, your HSA is an excellent tool. It gives you the possibility to spend the money that you already have side go to a specific use. These specific uses is perhaps not as obvious as a visit to the doctor or prescriptions, but when a change in mobility means some serious renovations to your home, your HSA is ready.
what your HSA cannot be used, however, is the addition of a second media with 72 inch 4 k oke room. Although it can improve your emotional well-being, so that the renovation work count as a qualified expenditure, it needs to be done to help in physical or medical problems.
investment? Yes. Investments.
so here's the great thing about your HSA, perhaps the best thing: you can use it to make money. Imagine, you have reached the end of the year and you have a balance in your HSA. Children has not break bones, and your spouse, and you remained healthy. Medical expenses were minimal, and because you paid on your account at each pay period, you have an excess contribution.
out the champagne and caviar! Right? Not so fast. You had more money, but that does not mean that you can just go to a Bank and stretch out your hand. As you have paid your tax-free account, there are tax penalties to attract these funds before you are 65. Sanctions up to 20%. Yep, to withdraw money with your HSA for nonmedical purchases, you pay the IRS 20%. Even after the age of 65, the money you take out of your HSA is taxed as income.
roll your HSA excess in an investment account gives money a chance to grow over time. According to the State of health of the market (and on the investment plan you choose), your IRA will earn compound interest. In this way, when you're ready to start drawing on your investment, you will have more money to get out what you put in.
of course, you have always the possibility to keep your money in your HSA, reversal of excess contributions year after year. Assuming that you are contributing to a surplus each year, your HSA will grow, earn interest. In addition, keep your money in an HSA allows you to pay for medical expenses tax-free, as it does now. And, as much as we hate to admit it, our need for medical care increases with age. Roll your means surplus each year your HSA grows, as long as you or your family can stay healthy.
that you keep your money in your HSA or it roll on an investment account, you should consider a number of things. No matter what type of investment account you roll your HSA, you will be taxed. An HSA is actually tax free if you use it to pay medical expenses, whether the year you pay in your HSA or years from now, when you pull it out of your HSA.
at the same time, if you drop your HSA surplus on an investment account, you will be taxed according to the account. The tax implications of each investment account are always the same, which means that your medical exemptions do not apply.
that said, the market fluctuates, accidents happen, you may need your money sooner rather than later. There is a lot to consider. Therefore, as with any major financial decision, a financial planner qualified for options that best meet individual needs.
keep the received
to all eligible medical expenses, including those mentioned here, you must be able to prove that they are medically necessary and prescribed. This means that you need to stay on top to keep your receipts and documents of insurance for every eligible purchase you make.
a lot of ass offer a debit card with their plans. Users of Heads - up HSAS, is a very practical tool. First of all, it is a reminder that the card, which may or may not look like your other debit cards, is only for your medical expenses. Take the time to label the card yourself. A map with a label that says: "MAP of HSA, QUALIFYING PURCHASES ONLY," would certainly give someone pause before sliding away.
if there is even a question on your HSA covering the money you are going to use this map, use another method of payment. Better safe than sorry. You can always call your HSA provider and confirm any purchase coverage.
in second place, like a debit card, it follows every payment you make, like the debit card from your bank. Page summary of your HSA card account is a practice account the money you spend and the balance you have left.
above all, keep your receipts and insurance documents from one year to another for the purchases of your HSA. If you never get checked and you cannot prove something you bought is a medical purchase, you can face severe fines, or even jail time for insurance fraud.
those are somewhat conventional, but your HSA cover very useful things. A massage might not be the first thing you think when it comes to insurance, but with a little work and a solid understanding of eligible medical expenses are, you can put your HSA to use so that you could have never contemplated before.
how do you use your HSA? Let us know in the comments below.