If you have a qualified high-deductible health insurance plan, you can open a health savings account, or generally known as HSA. Money that is deposited in these accounts is tax-deductible, and you can use them tax-free to pay for eligible medical expenses.
But do you actually know what kind of eligible expenses are covered in your HSA? Well, in addition to doctor bills, hospital stays and prescription drugs, you already are covered for the following things: over-the-counter medications, menstrual products, alternative treatments, travel for health care, dental and vision care, guide dogs, medicare costs, future medical expenses, and the list goes on.
- Over-the-counter medications – Under the CARES Act, over-the-counter medications are eligible for reimbursement from an HSA, without any prescription needed.
- Menstrual products – With other over-the-counter medications, menstrual products are also included in the CARES Act.
- Alternative Treatments – By alternative treatments, we’re talking about acupuncture, chiropractic care and weight-loss programs. They all qualify for a tax-free program from an HSA. And even if your insurance company won’t pay for them, HSA will still cover them.
- Travel for Health care – If you’re being hospitalized, all the costs of meals and lodging will be reimbursable from an HSA. The important aspect is to be there for medical care. If you’re a parent with a sick child, you can reimburse expenses for both yourself and your child.
- Dental and vision care – Save your money and use your HSA to pay for dental care, eye exams, eyeglasses and other expenses. It doesn’t matter if you have insurance coverage or not, use your health savings account to pay for expenses using tax-free dollars.
- Guide dogs – Those who suffer from physical disabilities, like vision or hearing impairment, can use their money for the HSA to pay for a service animal. But IRS is very specific when it says “service animals”, so it’s best to consult with a qualified tax professional to confirm the animal’s qualities.
- Medicare costs – Even though Medicare is a government health care for the group of age 65 and older, it’s still not free. HSA can be used to pay for both Medicare premiums and out-of-pocket expenses, like copays and co-insurance.
- Future Medical Expenses – HSA can roll over the balance each year, and that’s one of the top benefits of having it. You are not required to take a distribution to reimburse yourself in the same year you suffer a medical expense.
- A retirement fund – Although it’s not the original purpose, HSA can provide another avenue for people who are trying to save for retirement. A health savings account is also described as a “Roth IRA on steroids”. Even though both HSA and Roth IRAs provide tax-free money in retirement, HSAs have more benefits of a tax deduction for contributions.
- Insurance premiums – Many people are very concerned about how they’re gonna pay for their long-term care when they’re older. Long-term care insurance can help them with their concerns, and an HSA help policyholders to pay their premiums using tax-free dollars.