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Publication 502
Medical & Dental Expenses

What Are Medical Expenses?
What Expenses Can You Include This Year?
How Much of the Expenses Can You Deduct?
Whose Medical Expenses Can You Include?
What Medical Expenses Are Includible?
What Expenses Aren't Includible?
How Do You Treat Reimbursements?
How Do You Figure and Report the Deduction on Your Tax Return?
Sale of Medical Equipment or Property
Damages for Personal Injuries
Impairment-Related Work Expenses
Health Insurance Costs for Self-Employed Persons
Health Coverage Tax Credit

Kaiser - How does a High Deductible Plan Work

How Premiums and Deductibles Work

How can a Health Savings Account save me premiums and Taxes too?

Health Savings Accounts (HSA’s) allow you to save money, premium & Federal taxes by getting a qualified Bronze  high-deductible health Insurance  plan (HDHP), as higher deductible plans have lower premiums.  

The contribution to your HSA is tax deductible, lowers your MAGI – Modified Adjusted Gross Income  and shown on line 25 of 1040 with Form 8889 attached. 

One then pays their   allowable medical  expenses (IRS Publication 502, Internal Revenue Code (IRC) §213 [d])) Aetna through your HSA bank account – debit card.  The maximum contribution in 2018 is $3,450 single and $6,900 family Wells Fargo  * IRSSHRM * See table below. If you are over $55 and additional $1k.  An HSA is very similar to an IRA, except that it is for medical expenses.

When you retire, the money in your account can still be used for medical and some Insurance Premiums, without paying taxes.

Without an HSA or having an EmployER sponsored planmedical expenses are not usually deductible unless they are more that 10% PPACA 9013 of adjusted gross income IRS Publication 969 .PDFCalifornia tax*IRS publication 502

One might also consider a supplemental accident plan to cover the deductible in a Bronze HSA Plan.

Donald Care proposals often tout HSA’s.  The Patient Freedom Act by U.S. Senators Bill Cassidy and Susan Collins talks about PRE Funding HSA’s.   AHCA Rev 3.6.2017 page 85 et seq

ACA Health Reform does not appear to have any effect on HSA’s other than the change from 7.5% to 10% that one would have to otherwise incur for premiums and expenses to be deductible and over the counter medications must have a prescription. PPACA 9013 hsawells fargo While there is a $2k deductible limit for individuals and $4k for families, to qualify as an essential benefit, since the HSA account provides reimbursement, 42 USC 18022 (2) there should be no problem.  Check with your tax or legal adviser.

Trumps HSA’s are a scam Blog Insure Me 11.21.2016

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Contribution and Out-of-Pocket Limits  for Health Savings Accounts and High-Deductible Health Plans
  2019 2018 Change
HSA contribution limit(employer + employee) Self-only: $3,500 Family: $7,000 Self-only: $3,450 Family: $6,900* Self-only: +$50 Family: +$100
HSA catch-up contributions (age 55 or older) $1,000 $1,000 No change
HDHP minimum deductibles Self-only: $1,350 Family: $2,700 Self-only: $1,350 Family: $2,700 No change No change
HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums) Self-only: $6,750 Family: $13,500 Self-only: $6,650 Family: $13,300 Self-only: +$100 Family: +$200
*The IRS originally set at $6,900 then recalculated to $6,850, but subsequently provided relief to effectively restore the original limit. Source: IRS, Revenue Procedure 2018-30.

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21 comments on “Health Savings Accounts – HSA

  1. We are on a very tight budget. We can’t afford to make a monthly or quarterly contribution to our HSA account. Can we just fund it as needed and still get the tax benefits?

    • Yes. Here’s our citations:

      you can contribute any amount to your HSA as long as it does not exceed your contribution limit. You have complete flexibility in determining how much to contribute. This can be the maximum allowable, $50 per month, or whatever works for you.

      The timing can be weekly, monthly, full amount at once, any amount at any time, HSA

  2. I know that if your over 65 and on Medicare, you can’t contribute to an HSA. What about your spouse if she’s under 65 and you file jointly?

    • It’s possible that the plan you have meets the HSA qualifications, but I’m not an authorized CPA. As a licensed agent, I can only tell you that for a health plan to qualify for HSA it has to say HDHP on it. If I were to ask any Insurance Company if their plan qualifies, they would probably say the same thing. Even if the PPO Share plan qualifies, I doubt their legal department would let them tell you that. Thus, the plans that qualify say they are HDHP.

      To set up an HSA account, if you and your CPA believe your PPO Share Plan qualifies, just go to your own bank or one of these banks and set it up.

      The Tax Form 8889 requires that you certify your plan qualifies.

      Check the box to indicate your coverage under a high-deductible health plan (HDHP) during 2018 (see instructions)

      High Deductible Health Plan
      An HDHP is a health plan that meets the following requirements.

      Self-only coverage Family coverage
      Minimum annual deductible $1,350 $2,700
      Maximum annual out-of-pocket expenses* $6,650 $13,300

      * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses (such as copayments and other amounts, but not premiums) for services within the network should be used to figure whether the limit is reached.

      An HDHP can provide preventive care and certain other benefits with no deductible or a deductible below the minimum annual deductible. For more details, see Pub. 969. An HDHP does not include a plan if substantially all of the coverage is for accidents, disability, dental care, vision care, or long-term care. See Other Health Coverage next.

  3. I have had California covered for the past three years and always end up having to pay back the subsidy due to my income

    I am self-employed in my income is somewhat variable and it’s hard to estimate what I’m going to make in the coming year.

    So would like to get health insurance with no subsidy something around $700 a month.

    • I’m not sure where you are getting the per person premium amount. It sounds like you are using the child premium only and not including yours and your husbands too. The screen shot above shows unsubsized outside of Covered CA using our free instant quote engine with subsidy calculation.

      Covered CA subsidies are available if your income is less than 400% of Federal Poverty Level – Income Chart or use our quote engine. Covered CA would pay advance subsidies, to be reconciled at tax time form 8962 which gets attached to your 1040. If you are not sure of your income, you can elect not to take subsidies and take them as a tax credit when you file your 2018 taxes.

      If you are getting subsidies due to low income, I doubt that a HSA would be much value as there wouldn’t be a lot of tax write off. I’m not a CPA or Attorney. Please read and review the above webpage and seek proper legal and tax counsel.

  4. There must be a better HSA plan. 40%!?

    Can you suggest an HSA plan with better coverage?

    It looks like the 2016 plan has $1000 more deductible and 10% higher co pay? Seems like poor coverage to me.

    Even if the premiums are higher we need to consider a better plan with lower deductible etc.

    Boy Obama care – should be called Give Me More Money for less Coverage Care

    • Let’s take a look at the detailed HSA United Health Care HSA $4,500/60% brochure from our FREE Almost Instant Small Group Quote Engine.

      1st off, if you are buying an HSA Health Savings Account it’s because one doesn’t think they are going to have much in the way of claims and you want to save premium $$$ by having a high deductible. The premium savings goes into your HSA account Tax Free and rolls over to the next year and even into retirement if you don’t use it.

      As we see from the online brochure, this plan has a $4,500 deductible and a Maximum Out of Pocket of $6,500 in network for individuals. Thus, the co-insurance amount of 40% only applies to $2,000 worth of claims between $6,500 and $4,500.

      I will send you quotes for alternate HSA plans in a private email. Please note the differences in networks as show on page 4 & 5 of the United Health Care brochure.

      All rates are based on an 80% loss ratio rule, so basically any premium one sends to an Insurance Company under ObamaCare, you get back 80% and the Insurance Company keeps 20% for overhead and profit. Why pay them to keep your money on small claims?

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