Health savings accounts (HSAs) are a powerful financial tool focused solely on helping you cover eligible medical expenses. They function similarly to long-term savings and investment accounts, providing several tax advantages. However, there are specific rules surrounding HSA eligibility, contributions and spending.
Here’s where to go when you have HSA questions.
IRS Publications
While you don’t need permission or authorization from the Internal Revenue Service (IRS) to open an HSA, the government entity is responsible for setting guidelines. The IRS sets yearly contribution limits and dictates what counts as an eligible expense.
The IRS website is a valuable resource for learning more about how an HSA works and its benefits. There, you can find official IRS publications. Publication 969 has information about contribution limits, rules and more. You can also turn to the IRS website for relevant tax forms related to HSAs, such as Form 8889 to report contributions.
HSA Providers
Another source of knowledge for HSA questions is your provider. Providers are any bank, credit union, brokerage or insurance company that offers HSAs. They’re also known as HSA custodians or administrators.
HSA providers must be IRS-approved to offer these accounts.
If you have questions about your account, contact your HSA provider customer service team. Most providers have several communication channels, including email support, live chat and telephone lines.
Common HSA Questions
The best way to get answers to your specific questions is by contacting your HSA provider customer service team, but here are a couple of frequently asked questions about HSAs.
What Can You Use Your HSA on?
HSAs cover qualified medical expenses. The IRS has a list of eligible expenses. Generally, you can use your HSA to cover anything deemed medically necessary. That includes doctor visits, prescription medications, specialists and more. You can also use it to pay dentists, optometrists and several over-the-counter healthcare products.
What If You Use Your HSA on Non-Medical Expenses
If you use your HSA for nonmedical expenses before age 65, you’re subject to income tax, loss of tax advantages and a 20 percent penalty fee. Those over 65 can use an HSA for nonmedical expenses, but that spending is still subject to income tax.
Author Resource:-
Daniel Stewart has been helping people with their money management and personal finance with over 15 years’ experience in business finance. You can find his thoughts at HSA solution blog.
