So if you choose in a future year to enroll in a non-HDHP medical insurance option, your HSA funds will still be available to pay for qualified health care expenses. However, any distributions you make from an existing HSA for qualified expenses continue to be tax-free and excludable from your gross income. When you are no longer covered by a qualified HDHP, you are not eligible to contribute to an HSA. Using HSA Funds When Not Enrolled In High Deductible Health Insurance Because you are ultimately responsible for determining which expenses are reimbursable from your HSA, you should consult with your personal tax advisor to determine how IRS guidance on this issue should be applied to your specific situation. Generally, the “Establishment Date” is the later of the effective dates of your qualifying HDHP coverage or the date you provide evidence of intent to open the account (e.g., completion of a form or application requiring your signature that acknowledges your desire to open an HSA). The "Establishment Date" of an HSA is important because you can only receive tax-free distributions from your HSA for qualified medical expenses incurred after the date the HSA is considered established. Expenses Must Be Incurred After HSA "Establishment Date" It is your responsibility to keep all documents (such as receipts) that show how you used your HSA, including for non-qualified transactions, and self-report accordingly on your annual tax return. The IRS requires that you confirm your distributions are for qualified medical expenses. If you take a non-qualified distribution, you are subject to ordinary income tax on the distribution and a 20% penalty tax. is not yet age 19 (or not yet age 24 if a student) at the end of the tax year or is permanently and totally disabled.has not provided over one-half of their own support during the taxable year and.has the same principal place of abode as the covered employee for more than one-half of the taxable year,.According to the IRS definition, a dependent is a qualifying child (daughter, son, stepchild, sibling or stepsibling or any descendant of these) who: The IRS has not changed its definition of a dependent for health savings accounts. Your HSA funds can be used to pay for out-of-pocket qualified medical expenses incurred by your family members who qualify as your dependents for tax purposes. Therefore, you should become familiar with the Internal Revenue Service (IRS) definitions and also keep your receipts in case you need to defend your expenditures or decisions during an audit.
You are responsible for deciding whether the payment is for a qualified medical expense. Refer to IRS Publication 502 for a more complete list of qualified medical expenses. and over-the-counter drugs that are prescribed by a doctor.premiums for long-term care insurance, COBRA coverage, and Medicare Parts A and B.Your HSA funds can be used tax-free to pay for out-of-pocket qualified medical expenses, even if the expenses are not covered by your High Deductible Health Plan (HDHP), and include: As additional funds are added to your account via your deposits, you can reimburse yourself for qualified medical expenses paid for out of pocket, so long as those expenses occur after the date of the establishment of your HSA. Just like a checking account, you can only access funds once they are posted to your account. Many HSA participants elect to pay smaller expenses with after-tax dollars, allowing their balances to grow for the future. You may pay for qualified medical expenses with after-tax dollars, allowing your HSA balance to grow tax-free. You always have the option to choose when and when not to use your Health Savings Account (HSA) dollars. University-Wide Expectations and Services.Employee Assistance & Work/Life Program.
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