Health Savings Account Qualified Expenses

Importance of "Qualified" Expenses

When a Health Savings Account (HSA) distribution is used to pay for "qualified medical care expenses" of the account beneficiary, his or her spouse, or dependent children, the distribution is excluded from gross income.

Defining Qualifying Expenses

The IRS describes "Qualifying Medical Care Expenses" at (http://www.irs.gov/pub/irs-pdf/p502.pdf). Such medical expenses are qualified only to the extent they are not reimbursed by insurance or otherwise.

In addition, "Qualified Medical Care Expenses" must be incurred after the HSA has been established.

Examples of Qualifying Expenses

Following are a few examples of "Qualifying Medical Care Expenses" eligible for HSA reimbursement:

Medicine, drugs, birth control pills, and vaccines that your doctor prescribes and that are FDA approved.
Medical doctors, dentists, eye doctors, chiropractors, osteopaths, podiatrists, psychiatrists, psychologists, physical therapists, acupuncturists and psychoanalysis (medical care only)
Medical Exams, x-ray and laboratory services, insulin treatment and whirlpool baths the doctor prescribed
Nursing help. If you pay someone to do both nursing and housework, you can be reimbursed only for the cost of the nursing help.
Hospital care (including meals and lodging), clinic costs and lab fees
Medical treatment at a center for substance abuse.
Medical aids such as hearing aids (and batteries), false teeth, eyeglasses, contact lenses, braces, orthopedic shoes, crutches, wheelchairs, guide dogs and the cost of maintaining them
Ambulance service and other travel costs to get medical care. If you use your own care, you can claim what you spend for gas and oil to go to and from the place you received the care; or your can claim 10 cents a mile. Add parking and tolls to the amount you claim under either method.

Some Insurance Premium is HSA-Eligible

Generally, health insurance premiums are not "Qualifying Medical Care Expenses" except for the following:

Qualified long-term care insurance
COBRA health care continuation coverage
Health care coverage while an individual is receiving unemployment compensation
In addition, for individuals over age 65, premiums for Medicare A or B, Medicare HMO, an the employee share of premium for employer-sponsored health insurance.
Premiums for Medigap policies are NOT qualified medical expenses.

Some Expenses that don't Qualify

You cannot obtain qualified HSA reimbursement for:

Life insurance or income protective policies
The hospital insurance benefits tax, withheld from you pay as part of the Social Security tax or paid as part of Social Security self-employment tax.
Nursing care for a healthy baby.
Illegal operations or drugs.
Over-the-counter drugs
Travel your doctor told you to take for rest or change
Cosmetic surgery
Teeth Bleaching

If you have questions about deductibility, you should consult your tax advisor or refer to the IRS guidelines.

	Individual & Family Health Insurance
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