Do I understand correctly - RE Health Savings Accounts

[spncity]

Thanks for any comments... I have read many health insurance threads on this forum over time. I just want to get some confirmation...

I will stay on my spouse's medical insurance for the time being because the benefits are better. However, my new employer offers a high deductible health plan at no cost to me. One can open an HSA in conjunction with it.

So - I was thinking of signing up for it and putting bucks in the HSA.

Can I use the HSA deposits for:
1. Out of pocket medical expenses that the primary policy does not cover?
2. Medical expenses for family members other than myself?

And regarding premiums - can HSA funds be used for:
3. Future Medicare supplemental insurance premiums?
4. Future regular health insurance premiums when we retire prior to Medicare eligibility?
5. Wait - can it cover current health insurance premiums for the family on spouse's policy?

And in the medical-related category:
6. Can HSA funds be used for prescription glasses?
7. How about for dental out-of-pocket costs?

Thank you.

 

[REWahoo]

You can find answers to most of your questions here: Publication 969 (2010), Health Savings Accounts and Other Tax-Favored Health Plans

See my responses below which I believe to be accurate, but may be totally incorrect...

Can I use the HSA deposits for:
1. Out of pocket medical expenses that the primary policy does not cover? Yes
2. Medical expenses for family members other than myself? Yes

And regarding premiums - can HSA funds be used for:
3. Future Medicare supplemental insurance premiums? [-]Yes[/-] No, but you can use the funds to pay your Medicare premium. See quote from IRS Pub 969 below.
4. Future regular health insurance premiums when we retire prior to Medicare eligibility? No
5. Wait - can it cover current health insurance premiums for the family on spouse's policy? No

And in the medical-related category:
6. Can HSA funds be used for prescription glasses? Yes
7. How about for dental out-of-pocket costs? Yes

From IRS Pub 969:

Insurance premiums. You cannot treat insurance premiums as qualified medical expenses unless the premiums are for:

1. Long-term care insurance.
2. Health care continuation coverage (such as coverage under COBRA).
3. Health care coverage while receiving unemployment compensation under federal or state law.
4. Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap).

 

[MichaelB]

Thanks for any comments... I have read many health insurance threads on this forum over time. I just want to get some confirmation...

I will stay on my spouse's medical insurance for the time being because the benefits are better. However, my new employer offers a high deductible health plan at no cost to me. One can open an HSA in conjunction with it.

So - I was thinking of signing up for it and putting bucks in the HSA.

Can I use the HSA deposits for:
1. Out of pocket medical expenses that the primary policy does not cover? Only if they are eligible
2. Medical expenses for family members other than myself? If they are dependents

And regarding premiums - can HSA funds be used for:
3. Future Medicare supplemental insurance premiums? [-]Yes[/-] No
4. Future regular health insurance premiums when we retire prior to Medicare eligibility? Generally no, but there are exceptions
5. Wait - can it cover current health insurance premiums for the family on spouse's policy? No

And in the medical-related category:
6. Can HSA funds be used for prescription glasses? Yes
7. How about for dental out-of-pocket costs? Probably

Thank you.

here is a good reference https://www.wellsfargo.com/downloads/pdf/investing/hsa/HSA_Eligible_Expenses.pdf

I see another problem here. To qualify for the HSA income deduction you need to be enrolled in your employers policy, not just be eligible - and that might disqualify you from your spouse's policy or make you ineligible for some coverage.

 

[MichaelB]

They did change the rules this year and what constitutes an eligible expense is often a bit fuzzy. From the Wells Fargo HSA brochure

A special note on insurance premiums Insurance premiums are generally not considered qualified medical expenses. However, the following types of insurance premiums typically do qualify:

•• Continuation coverage under federal law (i.e., COBRA)

•• Qualified long-term care insurance contract

•• Any health plan maintained while an individual is receiving unemployment compensation under federal or state law

•• For accountholders age 65 and over (i.e., those eligible for Medicare), premiums for any health insurance (including Medicare and Medicare Part D premiums) other than a Medicare supplemental policy

my bold

 

[REWahoo]

Michael is correct. I edited my response to reflect the same information he posted regarding Medicare/Medigap premium eligibility.

To qualify for the HSA income deduction you need to be enrolled in your employers policy, not just be eligible - and that might disqualify you from your spouse's policy or make you ineligible for some coverage.

Good point. HSA accounts can be created only if you have a HSA policy.

 

[teejayevans]

Making sure whatever info you read is up to date, they were restrictions put in Obamacare bill.
TJ

 

[kaneohe]

also this minor detail on p. 3 http://www.irs.gov/pub/irs-pdf/p969.pdf
See section on Qualifying For An HSA and associated link. Generally you can't have more than 1 insurance plan so if you are enrolled in wife's.........
it's an OR gate , not AND.

 

[MichaelB]

Making sure whatever info you read is up to date, they were restrictions put in Obamacare bill.
TJ

If you are referring to the Patient Protection and Affordable Care Act (PPACA) I am not aware of any changes that impact HSA's. Are there any specific restrictions you can reference?

 

[REWahoo]

The PPACA did increase the tax penalty for non-qualified HSA withdrawals from 10% to 20%. Aside from that and a requirement than over-the-counter medications have a doctor's prescription to be eligible for HSA reimbursement, the new law is silent on almost all HSA provisions leading to much speculation as to how, or if, HSA's will change in the future.

 

[spncity]

also this minor detail on p. 3 http://www.irs.gov/pub/irs-pdf/p969.pdf
See section on Qualifying For An HSA and associated link. Generally you can't have more than 1 insurance plan so if you are enrolled in wife's.........
it's an OR gate , not AND.

Thank you all for the quick answers. Very helpful!

I think this nugget of info above answers the question about whether I can contribute to an HSA (can't if covered on spouse's regular health plan - which I still prefer to be on since it has better benefits and does not cost much more than the regular health plans being offered by new employer).

But is there a similar restriction on simply enrolling for and being covered on the new employer's no-cost-to-me HDHP? Is there any advantage to being on it (deductible is first $3,000 of medical expenses) for the purposes of a secondary coverage if disaster struck?

And is there really a law that says you can't be on "two" insurances if the premiums are being paid? (I realize you can't be reimbursed for the same expense twice like I've heard of people doing back in the day, but can the second insurance end up covering some of what the first does not cover?)

If you can't be on two, why does my insurer periodically ask if we still consider them to be our "primary" insurer? Why do forms ask for the primary insurance and the secondary insurance?

Thanks for any comments.

 

[Mulligan]

Thank you all for the quick answers. Very helpful!

I think this nugget of info above answers the question about whether I can contribute to an HSA (can't if covered on spouse's regular health plan - which I still prefer to be on since it has better benefits and does not cost much more than the regular health plans being offered by new employer).

But is there a similar restriction on simply enrolling for and being covered on the new employer's no-cost-to-me HDHP? Is there any advantage to being on it (deductible is first $3,000 of medical expenses) for the purposes of a secondary coverage if disaster struck?

And is there really a law that says you can't be on "two" insurances if the premiums are being paid? (I realize you can't be reimbursed for the same expense twice like I've heard of people doing back in the day, but can the second insurance end up covering some of what the first does not cover?)

If you can't be on two, why does my insurer periodically ask if we still consider them to be our "primary" insurer? Why do forms ask for the primary insurance and the secondary insurance?

Thanks for any comments.

Based on my circumstances and a few friends's, I believe you can have two policies. The trouble that I had with my daughters and friends, was the insurance companies were battling over who should pay and who shouldnt. Was a hassle for my friends. Mine was a small one because I was paying health insurance on my daughter, while my ex also had her on her husbands plan which was a very good one. They were trying to pass the buck back to mine which would have cost us out of pocket. We got rid of the that problem, by me dropping her health insurance. I boosted up the child support a bit and it was win- win for everybody but the insurance company holding the bill

 

[MichaelB]

The PPACA did increase the tax penalty for non-qualified HSA withdrawals from 10% to 20%. Aside from that and a requirement than over-the-counter medications have a doctor's prescription to be eligible for HSA reimbursement, the new law is silent on almost all HSA provisions leading to much speculation as to how, or if, HSA's will change in the future.

Right. That was my thought as well.

 

[kaneohe]

also this minor detail on p. 3 http://www.irs.gov/pub/irs-pdf/p969.pdf
See section on Qualifying For An HSA and associated link. Generally you can't have more than 1 insurance plan so if you are enrolled in wife's.........
it's an OR gate , not AND.

sorry for the misleading words above......what I meant is that I don't think you can do an HSA if you have more than the HDHP. You can certainly have more than 1 insurance plan......just that you will disqualify yourself from the HSA if you do.

 

[Alan]

And is there really a law that says you can't be on "two" insurances if the premiums are being paid? (I realize you can't be reimbursed for the same expense twice like I've heard of people doing back in the day, but can the second insurance end up covering some of what the first does not cover?)

If you can't be on two, why does my insurer periodically ask if we still consider them to be our "primary" insurer? Why do forms ask for the primary insurance and the secondary insurance?

Thanks for any comments.

I think you can be on 2 HI's at the same (or could while we were working a few years ago). Common example would be husband covered on his work's policy and wife covered on her work's policy, with each named as a dependent on each other's policy. Wife has treatment and she claims on both policies, her work's policy is primary and pays first, her husband's policy pays the out of pocket.

Another reason for the question from the insurer could be that you are covered by another policy while doing part time work. I once tore a cartilidge in my knee and the insurance company wanted to be sure I did playing in a soccer match as opposed to refereeing one as the referee's association that I worked for part time covered us for injuries.

 

[pixelville]

You will not be eligible for HSA if you are covered by your spouse's health insurance (non-HDHP) plan.
See qualifying worksheet
http://www.hsaresources.com/pdf/HSA_Resources_Eligibility_Contribution_Worksheet.pdf

 

[sn2792]

I sure am glad I read this thread. I have a HDHP with an HSA, but I added myself to my DH's non-HDHP plan for 2012 and didn't realize I couldn't contribute to my HSA while I am on his plan.

Such a wealth of information on this site.

 

[spncity]

Yes... Thank you again for comments/answers.

Very helpful...!