When it comes to health insurance, a Health Savings Account can help you save on health insurance, control your health care spending and reduce your taxes.
This kind of account combines high-deductible health insurance with a tax-favored savings account for use with medical expenses. But you may be surprised which expenses are eligible for HSA spending.
WHAT CAN I USE MY HSA FOR?
Broadly, eligible expenses include items that “diagnose, cure, mitigate, treat, or prevent illness or disease,” along with healthcare related transportation.
That includes expected items, like doctor and dentist visits, prescriptions, hearing aids and surgery. But it also includes treatments like acupuncture, batteries for medical equipment, Chiropractor visits, contraceptive devices, contact lenses and Lasik eye surgery and hot and cold packs.
In addition, there are a number of expenses that are potentially eligible for use with the HSA plan, which require additional documentation to prove medical necessity.
These include alternative healing, childbirth classes, therapy, CPR classes, dietary supplements, exercise equipment, hair loss treatment, language training, hormone therapy, sleep aids, vitamins and weight loss programs.
WHAT HAPPENS IF I USE MY HSA INCORRECTLY?
Spend HSA funds on non-qualifying expenses, such as food, and you’ll find yourself paying income tax on the purchase, as well as a 20 percent fee. Cosmetic surgery, toiletries, and over-the-counter medicines don’t qualify for your HSA in most cases.
Because the funds roll over every year, you shouldn’t feel an urgency to spend the money in your HSA, especially on non-qualifying items.
At Kensington Bank, we want you to get the most out of your money. We offer great rates on HSA accounts, including 2% APY, tax-free contributions, growth, and withdrawals. To learn more about the HSA options available at Kensington Bank, visit a branch or contact us today!