Paying for your medical expenses—tax-free
May 26, 2015
Is that legal?
Absolutely! When paid for through a Federal program know as Health Savings Accounts or HSAs. The HSA law took effect in 2004 in an effort to lower overall health care costs without compromising quality and choice in medical care. Because HSAs are Federal, they’re available in all 50 states, and Washington, D.C.
HSAs can be a valuable financial tool for managing your medical expenses. They can enable you to save money and pay for medical expenses tax-free.
In order to open a HSA, the law requires that the person first enroll in a qualified “high deductible health insurance plan,” or a HDHP. In 2015, the minimum annual deductible of a qualified HDHP for an individual is $1,300 and $2,600 for a family.
Fortunately, the Sedera Health total solution includes a qualifying HDHP through a specially designed Minimum Essential Coverage (MEC) program. The MEC coverage is a separate insurance plan that is limited to preventive and wellness coverage. However, HSA funds can be used for any “Qualified Medical Expense” or QME, as determined by the Internal Revenue Service.
An example of QMEs that you can use your HSA to pay for includes (but is not limited to); dental and vision expenses, transportation to medical treatment facilities, chiropractic care and much more. The best part is that these expenses can be paid tax-free with your HSA. QMEs include expenses of the individual, their spouse and dependents regardless of who is covered on their HDHP.
A little known fact is that anyone can contribute to your HSA. That means if an HSA holder can’t afford to contribute the full amount to their account ($3,350 individual and $6,550 for families in 2015), a friend, relative and/or their employer can contribute to the account. However, an account can only receive up to the contribution limit in a given calendar year, no matter who or how many people contribute to it. For persons who are 55 years of age or older the government allows for a HSA catch-up contribution of up to $1,000 additional per year.
Additionally, your HSA can be used as an investment vehicle. In fact, with few exceptions, the only real limit is your creativity. A minimum value of around $2,500 is common in order to begin investing. You can use your personal knowledge and intuition with your HSA, which is truly the Sedera way!
Given that the projected costs of post-retirement health care for a couple retiring now exceeds $266,000, an investment vehicle with the potential for high returns coupled with tax-free distributions for qualified medical expenses could be a truly valuable instrument to you.
In summary, the HSA serves two purposes; 1) As a health “spending” account, to pay for routine medical expenses and medications on a tax-free basis, and 2) As a true health “savings” account to accumulate wealth toward future medical expenses or your retirement needs.
The choice is yours, that’s the Sedera way.
Please note: Sedera has established a preferred relationship with HSABank®, a demonstrated industry leader in the financial services industry, but Sedera members are free to use the HSA provider of their choosing.
Learn more about HSABank at: www.hsabank.com
 HealthView Insights: 2015 Retirement Health Care Costs Data Report©