What you need to know to make the most of your Health Savings Account

Health savings accounts (HSA) are becoming more popular than ever as fewer employers provide insurance. Laverna Witkop, life and health specialist/agent at Ford Insurance, answers questions to some of the most often asked HSA questions:

How do I manage my HSA?

Your HSA is your account; the HSA dollars are your dollars. Since you are the account holder or HSA beneficiary, you manage your HSA account. You may choose when to use your HSA dollars or when not to use your HSA dollars. HSA dollars pay for any eligible expense. Most commonly, the HSA account holder will use HSA dollars to pay the out-of-pocket expenses associated with their high-deductible health plan, such as a deductible or coinsurance.

What expenses are eligible for reimbursement from my HSA?

HSA dollars may be used for qualified medical expenses incurred by the account holder and his or her spouse and dependents.

Are dental and vision care qualified medical expenses under an HSA?

Yes, as long as these are deductible under the current rules. For example, cosmetic procedures, like cosmetic dentistry, would not be considered qualified medical expenses.

What expenses are NOT eligible for reimbursement from my HSA?

The following expenses may not be reimbursed from an HSA:

– Premiums for Medicare

supplemental policies

– Expenses covered by another insurance plan

– Expenses incurred prior to the date the HSA was established

– Over-the-counter drugs purchased without a prescription, except insulin

Can I use my HSA dollars for non-eligible expenses?

Money withdrawn from an HSA account to reimburse non-eligible medical expenses is taxable income to the account holder and is subject to a 20 percent tax penalty-unless over age 65, disabled or upon death of the account holder.

When can I start using my HSA dollars?

You can use your HSA dollars immediately following your HSA account activation, once contributions have been made.

When do I contribute to my HSA account, and how often can I?

You, your employer or others can contribute to your HSA account through payroll deductions or as a lump sum deposit.* You can contribute as often as you like, provided your and your employer's total annual contributions do not exceed $3,100 for individual coverage, or $6,250 for family coverage. Individuals who are age 55 or older are eligible to make "catch-up" contributions up to $1,000.

How do I pay my physician or network facility at time of service with my HSA dollars?

You may request that the network provider submit your claim to your health plan. You should make sure that your provider has your most up-to-date insurance information. Once the medical claim has been processed, if applicable, out-of-pocket expenses will be billed. At this time you may choose to use your HSA debit card or HSA check* to pay for any out-of-pocket expenses, or you may choose to pay with your own money and receive reimbursement at a later date. You should always ask that your medical claim be submitted to the health plan before you seek reimbursement from your HSA. This procedure will ensure that provider discounts are applied. Also, remember to keep all medical receipts and any Explanations of Benefits.

What if I have HSA dollars left in my account at year-end?

The money is yours to keep. It will continue to earn interest and will be available for you and your health care costs next year. Any dollars left in your HSA account at year-end will automatically roll over into next year's HSA account.*

Can my HSA dollars be used for retirement health care costs?

Yes, but only for expenses eligible for reimbursement.

Can I use the money in my account to pay for my dependents' medical expenses?

You can use the money in the account to pay for the medical expenses of yourself, your spouse or your dependent children. You can pay for expenses of your spouse and dependent children even if they are not covered by your High Deductible Health Plan.

Can couples establish a "joint" account and both make contributions to the account, including "catch-up" contributions?

"Joint" HSA accounts are not permitted. Each spouse should consider establishing an account in his or her own name. This allows you to both make catch-up contributions when you are 55 or older.

My employer offers an FSA-can I have both a flexibe spending account (FSA) and an HSA?

You can have both types of accounts, but only under certain circumstances. General FSAs will probably make you ineligible for an HSA. If your employer offers a "limited-purpose" (limited to dental, vision or preventive care) or "post-deductible" (pay for medical expenses after the plan deductible is met) FSA, then you may still be eligible for an HSA.

Can I shift my IRA funds to my HSA?

Owners of individual retirement accounts who are enrolled in a HDHP plan can shift IRA funds to an HSA without facing a tax penalty. The IRS allows a one-time transfer that does not exceed your maximum HSA contribution limit.

Can the funds in an HSA be invested?

Yes, you can invest the funds in your HSA. The same types of investments permitted for IRAs are allowed for HSAs, including stocks, bonds, mutual funds and certificates of deposit. BN

*May vary depending on HSA plan design and benefit plan design. Refer to your Summary Plan Description or human resource administrator for specifics pertaining to your plan.