But under new guidelines that the IRS issued in mid, the list of preventive services that can be covered pre-deductible on an HDHP has been expanded to include certain treatments for certain specific chronic conditions.
With the exception of preventive care, HDHPs normally cannot pay for any medical services until the insured has met at least the minimum deductible set by the IRS. So HDHPs have mostly had the choice to continue to require members to meet their normal cost-sharing requirements if they end up needing COVID treatment as opposed to just testing. As of , the ACA prohibited the purchase of over-the-counter medications with HSA funds, unless a doctor wrote a prescription for them.
You can use the tax-free savings in your HSA to pay for doctor visits, hospital costs, deductibles, co-pays, prescription drugs, or any other qualified medical expenses. Once the out-of-pocket maximum on your health insurance policy is met, your health insurance plan will pay for your remaining covered medical expenses that year, the same as any other health plan.
Tax-free HSA funds can also be used to pay long-term care premiums. There are limits on how much you can withdraw tax-free from your HSA to pay long-term care insurance premiums.
These limits are for ; the IRS indexes them for inflation annually. If your age is:. While male contraception is not considered preventive care under federal regulations and thus coverage under a plan that covers male contraception before the deductible would make a person ineligible to contribute money to an HSA , the IRS did not enforce that provision until So in and , if you were in a state that required all plans to cover male contraceptives before the deductible, you could still contribute to your HSA if you had a plan that would otherwise have been considered HSA-qualified.
One of the requirements for a plan to be an HSA-qualified HDHP is that the plan cannot pay for any services before the deductible, other than preventive care. Preventive care was defined by the IRS in Notice , and that was revised in by Notice , to clarify that any services deemed preventive care under the ACA and thus required to be covered on all non-grandfathered plans with no cost-sharing would be considered preventive care for HSA-qualified plans as well.
As noted above, it was further revised in to allow HSA-qualified plans to provide pre-deductible coverage for certain care for chronic conditions. But some states — including Illinois, Maryland, and Oregon — enacted laws requiring all state-regulated plans to cover FDA-approved contraceptives for men, before the deductible was met.
One difference is the amount of unspent money you're allowed to roll over each year. An HSA allows you to roll over the entire unspent amount. Or your employer may choose to provide a grace period at the end of the year, in which you can use unspent money for up to two and a half months after the plan year ends. Another difference is that the money you put into an HSA is yours and you can take it with you if you switch jobs or retire.
You can't take money from an employer-sponsored FSA with you if you change jobs or retire. It can be challenging. Right now it's difficult to get reliable information regarding the cost and quality of treatment options, doctors and hospitals. Your employer or health plan may offer some web-based tools or a phone number to call for basic information. Public websites that compare hospital prices and state-based price transparency websites also provide information.
The hope is that as health savings accounts and other consumer-directed health care options become more widespread, access to information about cost and quality will expand. If you take money out for nonmedical expenses after you turn 65, you don't have to pay a penalty but you must pay taxes on the money. There is a problem with information submitted for this request. Sign up for free, and stay up-to-date on research advancements, health tips and current health topics, like COVID, plus expert advice on managing your health.
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This content does not have an English version. This content does not have an Arabic version. See more conditions. Healthy Lifestyle Consumer health. Products and services. The lowdown on HSAs. How an HSA works. Advantages to an HSA: You own the account, not your employer. You can make deposits like you do with other personal bank accounts. Your employer might add money too.
The money you contribute is tax-deductible. When you make contributions, your taxable income is reduced. You can invest your funds, and the interest or income is tax-free. The money can sit in your account and potentially grow over time, all of it tax-free. Since you own the account, the funds roll over year to year and the money stays with you — regardless if you leave your job or retire.
You can continue to withdraw the money tax-free for medical expenses. Or you can use it for non-medical expenses, just pay your regular income tax.
Some people even view their HSA as an added retirement account. Some HSA-qualified medical expenses may include:. Preventive care. Physical therapy. Lab tests. Medical equipment. Addiction treatment. Prescription drugs. Hospital services. Most dental care. Most vision care. The takeaway. Sign up for an HSA today. Check with your employer to find out your options. Open video transcript Close video transcript Video transcript Many health plans include an account designed with money-saving opportunities in mind.
Now, can you tell them apart? Sign in at myuhc. Who funds an HSA? How can I spend the money? It can only be used for qualified medical expenses. This does not include paying for premiums.
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