Last week we discussed some alternative strategies for using HSA’s. This week we’ll cap off the series with some additional need to know tidbits about HSA’s.
- An HSA can pay for COBRA premiums: An HSA generally cannot be used to reimburse the cost of health insurance premiums. One exception to this rule is the cost of COBRA. For those that have separated from their employer and are relying on COBRA for health benefits, these costs can be reimbursed with an HSA, according to the IRS.
- An HSA can pay for Medicare premiums: As with the COBRA exception, an HSA can also be used to pay for Medicare Part B, Part D and Medicare Advantage premiums, so long as you are 65 or older. Note that a Medicare supplemental policy, such as Medigap, is not an eligible expense. An HSA can also cover an employee’s premiums at work if they are 65+.
- An HSA survives a change in health insurance plans: Just because you change insurance plans doesn’t mean you need to close your HSA. And that’s true even if your new plan is not a high deductible policy. An HSA can be used to reimburse eligible medical expenses, even if they are incurred under a health insurance plan that wouldn’t qualify for an HSA.
- An HSA has a catch-up contribution: Most are familiar with the catch-up contributions available in a 401k or IRA. You may not realize, however, that an HSA also offers a catch-up contribution. Those 55 or older can add an extra $1,000 to an HSA.
- An HSA and a FSA don’t mix: you can’t have an HSA if you have other health coverage that will pay for medical expenses before your high deductible is met. Where this may frequently occur is if your spouse has a Flexible Spending Account.
With the versatility and tax advantages of HSAs, it’s a no-brainer! If you have a High Deductible Health Care Plan, you should seriously consider utilizing it. At WWC, we can help you navigate the market!