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Thursday, June 20, 2013
HSA Massage Rules
Image courtesy of Marcus at FreeDigitalPhotos.net

When looking at HSA dollars and how to spend them, it’s important to consider how one expense can be qualified and another similar expense is not.  A good example of the grey area in the otherwise "black vs. white", "yes vs. no", "qualified vs. non-qualified expense" HSA world we live in, would be “massage”.

Massage therapy appears nowhere in the long list of eligible HSA expenses that the IRS provides.  But in certain, clearly defined circumstances it can become an eligible expense from your health savings account.  Consider the following scenario:

Sally was involved in a fender bender.  After the accident she went to her chiropractor, got an adjustment and got back to daily life.  She worked through the first few days after the wreck just fine, but after 4 days the real pain set in.  She went to her general practitioner to be examined. 

He could see that nothing was broken, but the impact of the accident had left her with a twisted muscle in her lower back.  The pain was exacerbated by Sally’s desk job.  Dr. Smith wrote Sally a prescription for two therapeutic massages, knowing they would aid her recovery. 

HSA Prescription Requirements
Image courtesy of photostock at FreeDigitalPhotos.net

Therapeutic massage/body work is similar to relaxation massage, but it is more concentrated on correcting things like strained muscles and repetitive use injuries.  Dr. Smith saw massage as a viable option for Sally, to both ease her pain and speed healing.  He knew that two visits would help get the back muscle to relax and get her back into the swing of things.  With the doctor’s prescription, Sally was able to use her HSA dollars.  She also made sure that she had a very good paper trail in the case of an audit by the IRS. 

If Sally had not gone to see Dr. Smith and instead went to a spa/massage center in her neighborhood, she could not use her HSA funds to pay for her treatment.  The doctor’s prescription is the key.  Unless a procedure is deemed medically necessary, you cannot use your HSA funds to pay for it. 

Dr. Smith made the call.  His prescription made Sally’s massage treatment a qualified HSA expense.  Sally put her prescription for two therapeutic massages into her HSA folder and matched the receipts.  She was careful not to misuse funds.  Perfect!

Navigating HSA Rules
Image courtesy of Ambro at FreeDigitalPhotos.net

Massage is a great example of one of those vague and tricky areas that may or may not be an eligible HSA expense, based on a few very important factors.  The golden rule if you’re ever in doubt, is to get a prescription from your doctor for whatever medicine or procedure you’re questioning.

The moral of the story is that when you’re navigating the grey area of qualified HSA expenses, it’s always in your best interest to make sure you use your HSA funds correctly.  This isn’t always easy, so please keep in mind there are several resources to help you determine whether or not a certain expense will be deemed eligible for funds from your health savings account. 

First, you can check the official IRS position on the issue by consulting IRS Publication 502.  We know that’s a little tedious to read through, so you can easily visit our webpage on Eligible HSA Expenses and use our convenient dropdown features to help you quickly find what you’re looking for.  But if you want a quick and easy answer, you can always contact our office and we would be more than happy to answer any questions you may have on the matter. 

Let us know what you think in the comments below, and share this post with others who have health savings accounts to help them out!

Be smart and safe with your HSA and as always, we look forward to hearing from you!


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Posted by HSA Admin at 6/20/2013 7:06:00 PM
Wednesday, April 24, 2013

Can An HSA Help Me?

Some time ago when HSAs first became law in December of 2003, opponents touted the plans as "only for the healthy and the wealthy". This couldn't be further from the truth. You don’t have to be wealthy to be smart with your health care dollars. If you have medical bills, be wise and pay for them with tax- free funds. 

Anyone who wants to make life a bit less stressful should consider looking into opening a health savings account for medical costs.
 
Take the following quiz to see if an HSA can help you:
Lowering Your Insurance Premiums
 
Lower Insurance PremiumsTypically, an insurance policy that works with an HSA has a higher deductible than a traditional plan, and also carries a lower premium. The monetary difference you save in purchasing the high deductible plan can be put away in your HSA and used to pay for future medical expenses. A real world example is one that looks like this:

Your current plan has a $1,000 deductible and you pay $300 a month. The HSA plan has a $2,500 deductible and you pay $225 a month. The savings in monthly premiums is $75. This amount can then be deposited into your HSA bank account. After 12 months, you would have saved $900 in premiums!!! 
 
That money now sits in your HSA earning tax-free interest, rolls over year after year, is ready to be spent on any necessary medical costs you may have, and can be pulled out as taxable income at age 65 for supplemental retirement income.
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Reducing Your Taxable Income
 

Reduce Taxes with an HSAAny money you deposit into your health savings account reduces your taxable income. Two options to consider when funding your account are whether to fund it pre-tax, or post-tax. You can set up “pre-tax” contributions through your employer (through a section 125 or cafeteria plan) or you can claim any “post-tax” HSA contributions you made when you file your taxes.

Both of these methods effectively reduce your taxable income by the amount of your annual HSA contributions. This is a great way to reduce your tax liability, while simultaneously setting aside money to pay for upcoming healthcare expenses in the future!

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Paying For Medical Expenses Tax-Free
 
Because HSAs are regulated by the IRS, there are a few guidelines that need to be followed. One example would be what you can spend your money on. We refer to these “sanctioned costs” as eligible HSA expenses. Once the money is deposited in your HSA, you can use it for healthcare costs relating to medical, dental, vision, pharmaceutical, alternative healthcare, etc. This can be for yourself, your spouse and any dependents regardless of the type of health coverage they have, or even if they don’t have any coverage at all. Again, all of the money that is spent on these eligible HSA expenses is spent tax-free.
 
See the flyer below for examples of what qualifies as an eligible HSA expense:

Eligible HSA Expenses

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Saving Money for Retirement

Save for Retirement with an HSAHealth savings accounts are actually an excellent retirement vehicle. In fact, they’re sometimes referenced to as “Medical IRAs”! For example, if you have a particular year with few medical bills, you can still make deposits to your health savings account for all the tax benefits. In addition, the money you don’t use in any given year carries over (rolls over) to the next year, unlike a Flexible Spending Account (FSA). This allows you to build a strong balance in your HSA that not only earns tax-free interest while the funds aren’t being used, but can also be invested in stocks, bonds and mutual funds as well!

Another key difference from the FSA that makes the HSA a great retirement savings option is that the money in your HSA belongs to you, not your employer. If you change jobs, start or stop your insurance coverage, move across the country, etc. your HSA follows you, much like a 401(k)! 
 
Even when you turn 65, you can continue to use the money for eligible medical expenses tax-free. You can even pay Medicare or LTC premiums, or you can withdraw the funds from your HSA and count it as taxable income to take a trip, or spend it on anything you choose. It is your nest egg. You saved it, you earned it.
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So, if you answered “yes” to any of the questions above, an HSA may really be beneficial to you and your healthcare situation! If you have any questions about any of the topics we covered here, please feel free to let us know in the comments below, or contact our officeHSAs are what we do, and we look forward to hearing from you!

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Posted by HSA Admin at 4/24/2013 9:31:00 PM
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