5 Health Savings Account Rules That Might Surprise You

Get to know what health savings account rules are, since HSAs can give you a convenient alternative to the limitations on deducting medical expenses under the Tax Cuts and Jobs Act.

While the new tax law limits itemization of health care expenses to only those whose expenditures on these costs amount to exactly 10% of income, HSAs have more flexibility.

Intended for people whose health care insurance has high deductibles, HSAs let you put pre-tax dollars into an account that can go toward all types of healthcare expenditures.

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Health Savings Account Rules

For 2018, the Internal Revenue Service has capped annual contributions at $3,450 for individuals and $6,850 for families. Plus, those 55 and older can put an extra $1,000 in their HSA every year. Here are five novel ways to use these funds.

Acupuncture, Chiropractors, and Massage Therapy

While many health insurance programs don’t cover acupuncture, chiropractors, or massage therapy, they actually qualify as expenses you can cover with HSA funds.

Some people use the acupuncture to help alleviate chronic pain, depression, and more. Chiropractic care is generally a way to correct body alignment issues.

Massage therapy can serve multiple purposes, ranging from supporting chiropractic care to treating muscular disorders. However, to qualify for HSA compensation, it must be part of a treatment plan for a medical condition. This means you may need a diagnosis, prescription and/or referral from another physician, like a chiropractor or M.D.

Service Animals

If you have authorization from a doctor for a service animal, HSA account rules allow the money to go towards this need.

You can use the funds to purchase, train, and even support the animal. Costs like veterinary care and food qualify, which can be incredibly helpful for managing ongoing expenses.

Medical-Related Home Improvements

While you can’t use your HSA to build an addition, you can use it for accessibility modifications like support bars, wheelchair ramps, and other quality of life improvements for a qualifying disability.

There are HSA account rules regarding the size of the reimbursement, depending on how the improvements impact your home’s value. However, if you need to make these modifications, it’s worth exploring.

Dental Care

HSA account rules allow you to cover certain kinds of dental care with the money. For example, you can use the funds for cleanings, sealants, fillings, and x-rays.

Certain treatments for dental diseases also qualify, as well as specific restorative procedures. However, purely cosmetic procedures, like veneers or teeth whitening, are not eligible.

No Time Limit on the Tax Savings

One benefit of HSAs is that there are no time limits for spending the money. You can let it remain in the account indefinitely, allowing you bolster your savings.

Note, however, that another type of plan that often gets referred to as an HSA but has a different name — health care flexible spending accounts — has a $500 annual limit on carryovers from one year to the next. True HSAs have no dollar limit on the amount you can carry over.

Additionally, they actually have more than one tax saving aspect to them: You contribute pre-tax (as previously mentioned) and you don’t pay sales taxes when the money goes to a qualifying expense.

Ultimately, an HSA is a powerful tool in your financial arsenal, so make sure you take advantage of what it can offer.

Readers, what kind of HSA do you have — and how are you using it?