A few reminders on Health Savings Accounts…

HSA Eligibility Rule Update
Per the IRS, to be eligible to make HSA contributions, a person must not have used VA benefits for anything other than preventative services in the past three months.  Effective January 1st, 2016, any veteran who receives VA benefits for a service-connected disability can make or receive HSA contributions regardless of when they received VA benefits.  

Who can use my HSA funds?
HSA funds can be used for the qualified medical expenses of yourself, your spouse, and your qualified tax-dependents. They do not need to be covered by your health insurance. If your spouse and tax-dependents are covered by traditional insurance, you can even pay their co-pays with your HSA. Please note: even though you may keep children on your health insurance until age 26, according to IRS rules a child is only typically considered to be a tax-dependent up to age 19 or age 24 if a full-time student.

Also, if a child’s parents are not married and one parent takes the tax deduction for the child, the other parent is typically allowed to use their HSA funds for the child’s qualified medical expenses. See IRS Publication 502 or your tax advisor for more information.

Do the funds in my HSA ever expire?

No, an HSA is not a “use it or lose it” plan like a Flexible Spending Account (FSA). You keep the funds even if you change jobs or retire. HSA funds remain yours for your lifetime and then are passed on to your designated beneficiary(s). Once you are no longer eligible to make deposits to your HSA, the funds can still be used for qualified medical expenses for the remainder of your lifetime. At age 65, the 20% penalty for using HSA funds for non-medical expenses goes away. HSA funds used for non-medical expenses after age 65 will be taxed at your normal income tax. If the funds are used for qualified medical expenses after age 65, they continue to be tax and penalty free.