Health Savings Accounts

Health Savings Accounts (HSAs) are matched with a qualified High Deductible Health Plan (HDHP).  HSAs provide you with triple advantaged tax incentives.  First the annual savings contribution can be tax-deferred, then savings growth is tax free, finally you withdraw funds tax free when payment is for eligible health care expenses.  Yes, health care expenses for you and your family—including your spouse and dependent children—even if not on your health plan.
HSA accounts are owned by employees (similar to a 401k with beneficiaries) who then use the funds to pay for eligible health care expenses such as copays and deductibles.  Qualified medical expenses also include services that your insurance may not cover such as orthodontia and dental, prescription eye wear, hearing aids and batteries, and much more (see list below).   You can also opt to treat this as a long term savings vehicle with accumulating tax advantaged HSA funds for future health care needs such as:
  • COBRA premium
  • Future deductibles
  • Medical expenses in retirement

Maximum 2016 HSA Contribution:

Individual                  $3,350

Family                         $6,750

55+                               $1,000 (allowed in tax year of 55th birthday / only available to 1 adult in family plan)

 Ten Reasons to Start a Health Savings Account (HSA)

Health Savings Account (HSA) Eligible/Ineligible Expenses

Funds you withdraw from your HSA are tax-free when used to pay for qualified medical expenses as described in Section 213(d) of the Internal Revenue Service Tax Code. The expenses must be primarily to alleviate or prevent a physical or mental defect or illness, including dental and vision. A list of these expenses is available on the IRS Web site, www.irs.gov in IRS Publication 502, “Medical and Dental Expenses.”

Any funds you withdraw for non-qualified medical expenses will be taxed at your income tax rate plus 20% tax penalty if you’re under 65.

The following list provides examples of eligible and ineligible medical expenses. This list is not all-inclusive. Remember, the IRS may modify its list of eligible expenses from time to time. As always, consult your tax advisor should you require specific tax advice.

Eligible medical expenses may include:
  • Acupuncture
  • Alcoholism
  • Ambulance
  • Annual Physical Examination
  • Artificial Limb
  • Artificial Teeth
  • Autoette
  • Bandages
  • Birth Control Pills
  • Body Scan
  • Braille Books and Magazines
  • Breast Pumps and Supplies
  • Breast Reconstruction Surgery
  • Capital Expenses
  • Car
  • Chiropractor
  • Christian Science Practitioner
  • Contact Lenses
  • Crutches
  • Dental Treatment
  • Diagnostic Devices
  • Disabled Dependent Care Expenses
  • Drug Addiction
  • Drugs
  • Eye Exam
  • Eyeglasses
  • Eye Surgery
  • Fertility Enhancement
  • Founder’s Fee

  • Guide Dog or Other Service Animal
  • Health Institute
  • Health Maintenance Organization (HMO)
  • Hearing Aids
  • Home Care
  • Home Improvements
  • Hospital Services
  • Insurance Premiums
  • Intellectually and Developmentally Disabled, Special Home for
  • Laboratory Fees
  • Lactation Expenses
  • Lead-Based Paint Removal
  • Learning Disability
  • Legal Fees
  • Lifetime Care—Advance Payments
  • Lodging
  • Long-Term Care
  • Meals
  • Medical Conferences
  • Medical Information Plan
  • Medicines
  • Nursing Home
  • Nursing Services
  • Operations

  • Optometrist
  • Organ Donors
  • Osteopath
  • Oxygen
  • Physical Examination
  • Pregnancy Test Kit
  • Prosthesis
  • Psychiatric Care
  • Psychoanalysis
  • Psychologist
  • Special Education
  • Sterilization
  • Stop-Smoking Programs
  • Surgery
  • Telephone
  • Television
  • Therapy
  • Transplants
  • Transportation
  • Trips
  • Tuition
  • Vasectomy
  • Vision Correction Surgery
  • Weight-Loss Program
  • Wheelchair
  • Wig
  • X-ray

Ineligible medical expenses may include:

  • Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby
  • Controlled Substances
  • Cosmetic Surgery
  • Dancing Lessons
  • Diaper Service
  • Electrolysis or Hair Removal
  • Flexible Spending Account
  • Funeral Expenses
  • Future Medical Care

  • Hair Transplant
  • Health Club Dues
  • Health Coverage Tax Credit
  • Health Savings Accounts
  • Household Help
  • Illegal Operations and Treatments
  • Insurance Premiums
  • Maternity Clothes
  • Medical Savings Account (MSA)

  • Medicines and Drugs From Other Countries
  • Nonprescription Drugs and Medicines
  • Nutritional Supplements
  • Personal Use Items
  • Swimming Lessons
  • Teeth Whitening
  • Veterinary Fees
  • Weight-Loss Program