Health Savings Accounts (HSAs) are medical savings accounts similar to IRA accounts, with attractive opportunities. To be eligible to contribute to an HSA, you must be enrolled in a High Deductible Health Plan, as defined by the HSA rules, and if on Medicare, contributions to an HSA are not allowed.
- HSAs are fully portable at any time.
- Trustee-to-trustee transfer and rollover rules are similar to those for IRAs.
- Account holders can make a one-time IRA-to-HSA rollover.
- There is no time limit on HSA reimbursements.
- All future expenses are eligible, regardless of enrollment when incurred.
- Other coverage, including spousal FSA (flex spending account), negates the ability to contribute to an HSA.
- HSAs can be used to pay certain insurance premiums.
- HSAs are not subject to probate.
- HSAs are taxable to anyone besides a spouse who inherits them.
The following article from the Journal of accountancy explains these opportunities in more detail. Planning for these opportunities is critical to getting the most benefit from your HSA account.
If you have any questions, don’t hesitate to contact your tax advisor.
