Daniel Stewart

What Does HSA Cover?

A health savings account, also known as an HSA, is an excellent investment that can provide peace of mind for the long haul. There's no denying that it's a wise financial choice. But when can you use it? Who and what does HSA cover? In this article, we'll provide some clarity and answer those burning questions.

How an HSA Works

An HSA is a type of savings account with the sole purpose of funding medical expenses. They're self-managed and can cover you or your entire family. Unlike an FSA, an HSA is entirely self-funded. That means that you make contributions rather than your employer.

So, are HSA contributions tax deductible? If you're on the fence about whether to open an HSA or not, the tax benefits might push you in the right direction! An HSA is like a triple threat. Not only are contributions tax-free, but so are qualified withdrawals and growth from investments.

On top of all that, it can help reduce your taxable income. Are HSA contributions tax deductible? According to the IRS, all contributions from anyone other than your employer are deductible!

What Does an HSA Cover?

Now that you understand the financial perks, when can you use an HSA? These savings accounts are exclusive to healthcare expenses. The laundry list of qualifying expenses is massive. As a general rule of thumb, anything that's medically necessary will qualify. Whether it's prescription eyewear or long-term home care, your HSA should cover it.

Technically speaking, you can make non-medical withdrawals. However, they come with a pretty steep penalty.

Who Does an HSA Cover?

There are two HSA options available. You can contribute to an individual plan or family plan. They come with different contribution limits, but both require that you have coverage under a High Deductible Health Plan.

Interestingly enough, both plans also have versatile coverage terms. Even if you have an individual plan, you can use funds to cover qualified medical expenses for:

• You
• Your spouse
• Dependents on you claim on your taxes
• Anyone you could claim but didn't

Prepare for Tomorrow with an HSA

Ultimately, a health savings account provides excellent flexibility for you and your family. It can support your medical needs for decades and help you avoid getting blindsided by unexpected costs. They're a worthy investment that can make a world of difference in your financial and personal health.

Author Resource:-

Daniel Stewart has been helping people with their money management and personal finance with over 15 years' experience in business finance. You can find his thoughts at invest HSA blog.