Hsa what is allowed

How should I keep track of my eligible expenses? In order to be both tax-free and penalty-free, the distribution must be for an eligible medical expense. Withdrawals made for other purposes will be subject to ordinary income taxes. Given that Medicare does not cover all of your medical expenses, most HSA owners over age 65 continue to use their HSA funds for eligible medical expenses to ensure they receive the maximum benefits from their HSA.

Use your HSA to pay for the employee share of employer -sponsored healthcare premiums provided that the employee share is not deducted pre-tax.

You must be enrolled in a high-deductible health insurance plan to qualify for an HSA. The government only allows these tax advantages if you use your HSA money for qualified medical expenses. These costs generally include payment to doctors or dentists , prescriptions , imaging such as MRIs , medical services such as home care and medical equipment or supplies. Examples of generally eligible expenses are hearing aids, psychological counseling, chiropractic services, condoms, breast pumps, eyeglasses, physical therapy and smoking cessation programs.

Rules have become stricter over the years about what expenses are eligible for HSA funds. Examples of no-nos from the IRS include vacations and vitamins. Be very careful not to use your HSA debit card or checks on non-eligible purchases.

Yes, you read that correctly—even if you accidentally paid for a burger with your HSA debit card, you will have to report it on your annual income tax return and pay taxes on it. Many or all of the products featured here are from our partners who compensate us.

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