Understanding An HSA
HSA Tax Benefits
There are three key tax benefits to a Health Savings Account (HSA). Money goes into and comes out of an HSA tax-free (as long as funds are used to pay for qualified medical expenses).
1. Contributions to HSAs are not subject to federal income taxes.*
2. Earnings to an HSA from interest and investments are tax-free.
3. Distributions from an HSA to pay for qualified medical expenses are tax-free.
4. All money deposited in your HSA can build year after year for a healthcare IRA.
Build Savings - All money deposited in your HSA can build year after year for a healthcare IRA.
Per the IRS web publication;
You can claim a tax deduction for contributions you, or someone other than your employer, makes to your HSA even if you don't itemize deductions on Form 1040 up to the limit in 2018 of $3,400.00 single, and $6,900.00 family.
Contributions to an HSA made by an employer (including contributions made through a cafeteria plan) may be excluded from gross income.
The contributions remain in your account until you use them.
The interest or other earnings on the assets in the account are tax-free.
Distributions may be tax-free if you pay qualified medical expenses. (See Qualified Expenses Page 2 Publication 969 (2015)
An HSA is “portable” which means it stays with you if you change employers or leave the workforce.
Tax-Savings - Health Savings Account opens the door to tax advantages and savings
Tax- Free - With an HSA account the money you deposit (W-2 & 1099) are income tax-free.
Tax Write-Off - All deposits are 100% tax-year write-off up to the maximum amount unless you qualify for accelerated deposits 55+ which is +$1,000 more annually.
Per IRS website;
You can't include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Otherwise, these items are taken to maintain your ordinary good and aren't for medical care.
VERY IMPORTANT - BE SURE YOUR HSA SPENDING IS DR. Ordered not self-directed. Be sure to consult with your practitioner before making HSA purchases to ensure if audited, you have verification your HSA is not used for decisions you make alone. The IRS in an audit will not challenge HSA spending when a health professional is involved.
Save 28-36% - Through an HSA, instead of paying taxes on holistic spending Dr. prescribed; herbs, vitamins, oils, supplements, devices, equipment, practitioner treatments, etc. means 28-36% tax savings.
No Spending Surprises - Your HSA account is used to satisfy out of pocket or IUA ('individual unshared amount'). With an HSA there's no large out of pocket before sharing benefits begin.
Debit Card Simplicity - Your HSA account includes a debit card for simplified health spending. All transactions are tracked and downloaded in a report that can be submitted to Sedera to verify IUA is met so sharing benefits can begin.
Year-End tax Statement - Your HSA includes year-end tax statement for tax deduction filing.