Ask the Expert: ComPro
During this holiday season, many of you are thinking of parties, family, and other special times. What are we thinking of at ComPro? Health Savings Accounts! What is more festive than that? Here are some of the latest updates and reminders on HSA accounts.
Contribution Limits—As you are planning on year-end taxes, it is good to clarify how much you can contribute to your HSA. The 2019 maximum contribution is $3,500 for an individual and $7,000 for a family. Those ages 55+ may contribute an additional $1,000. One note of clarification, if you have a couple and both are eligible for the additional $1,000 contribution, the deposits must go into separate HSA accounts. The deadline to make 2019 HSA contributions is April 15, 2020. The 2020 contribution limits are $3,550 for an individual and $7,100 for a family. The additional $1,000 contribution for those 55+ still applies.
Over the Counter (OTC) Medications—There are several OTC medications that are eligible to be paid for with your HSA account. To take advantage of this you must have a prescription from your physician. Examples of eligible medications are acid controllers, allergy and sinus medication, hemorrhoid treatment, motion sickness medication, etc. Other OTC items are still ineligible for HSAs such as bandages, braces and supports, catheters, crutches, and reading glasses. To see a complete list of eligible and ineligible expenses refer to IRS Publication 502.
Medicare and HSA Accounts—Once a person turns 65, they can use their HSA account to pay for Medicare Part B and D premiums in addition to HSA eligible expenses. It cannot be used to pay for a Medicare Supplement plan. At age 65, a person can take penalty-free distributions from the HSA for any reason. However, in order to be both tax-free and penalty-free the distribution must be for an HSA eligible expense. Withdrawals made for other purposes will be subject to ordinary income taxes.
Direct Primary Care—A common question is, “Can I pay for my Direct Primary Care (DPC) physician from my HSA account?” Under existing interpretation of the Internal Revenue Code, people with HSAs are prohibited from engaging in paying for DPC memberships with HSA funds. However, President Trump signed a health care executive order in June which supports direct primary care and allowing patients to use HSA accounts to pay for DPC memberships. We hope to see further clarification on this issue.
Fund Rollover—HSA funds rollover from year to year. Unlike a Flexible Spending Account an HSA is not “use it or lose it”. Your balance can continue to grow every year. There is no time limit on using the funds.
If you have any questions you would like discussed in future articles, please email email@example.com. Merry Christmas!