TIPS ON SAVING
TAKE ADVANTAGE OF PREVENTIVE CARE
Under the Affordable Care Act, all plans are required to cover preventive care. This usually includes regular doctor appointments, vaccines for children, wellness programs, and women’s care. Find out what your plan covers and take advantage of those benefits as much as possible.
STAY IN NETWORK
Just like a traditional health plan, your HSA-eligible health plan will be part of a network of preferred providers. Those are the doctors and hospitals that your plan has contracted with to provide you services at agreed prices. For example, your plan may have worked with its in-network doctors to determine that $150 is the correct amount for you to pay for an x-ray. If you choose to go out of network, you may be charged more.
In addition, only the agreed-upon amount will count toward your in-network deductible. Anything spent beyond that will only count toward your out-of-network expenses, which can be higher than the IRS deductible limit. If you rely heavily on out-of-network care, you could end up paying more than your deductible each year before your co-insurance starts.
LOOK FOR DISCOUNTS
Being on an HSA-eligible health plan means you can’t be a part of any program that offers you reimbursements for your medical expenses. However, you are allowed to receive discounts on expenses like your prescriptions. Since this qualifies as a change in prices and not reimbursement, you can still count this cost toward your deductible and pay for it with your HSA while remaining eligible to contribute.
You should also always ask about generic options for your prescriptions. These will cost less and help you to save money.
CHOOSE YOUR CARE WISELY
Not every sniffle needs a trip to the doctor, but going in to get treatment for that lingering cough can help you avoid getting stuck in the hospital due to a bad case of pneumonia. Know your body, and make the decision that is most sensible for your health and for your savings account. That doesn’t mean not going to the emergency room when you do have an emergency, but it might mean taking a few days off work and getting lots of rest instead of going to the doctor for your head cold.
TIPS ON TAX REPORTING
YOU CAN'T GET A DEDUCTION TWICE
If your HSA contributions were made pre-tax directly out of your paycheck or through an employer contribution, you can’t count them as an above-the-line item on your tax return to get the deduction taken again. If you paid for a qualified medical expense out of your HSA, you can’t take a deduction on that same expense, since that money has already been deducted from your taxes. In short, you can’t double-dip on tax deductions.
YOU GET ALL DEDUCTIONS ON YOUR HSA
No matter who made the contribution to your HSA – you, your employer, your friends and family – you get the deduction. Similarly, if you made a contribution to someone else’s HSA, that person gets the tax deduction rather than you. Any contributions made post-tax, whether from you or someone else, should be taken as a line-item deduction on your tax return.
REPORTING NON-ELIGIBLE WITHDRAWALS
If you did need to withdraw money for a non-eligible expense, that money needs to be included in your taxable income for the year. In addition, if you are under the age of 65 and not on disability, you will need to pay an additional 20% excise tax on the amount withdrawn.
OVER-CONTRIBUTIONS
If you aren’t able to withdraw the extra money from your HSA, you’ll need to report the extra money contributed as part of your income and pay an additional 6% tax on the extra. Your deadline to work with your administrator to withdraw the excess is tax day (usually April 15th) the year following your over-contribution.
HSA: START HERE
For more information about HSAs, check out our book, HSA: Start Here by S.J. Klumpenhower.
Find out everything you need to know about HSAs, from establishing your account and making deposits to using your savings and filing taxes.
