Basics

Compound It! Use your HSA as an unemployment safety net

If you lost your job today, how would you get by? It's not a fun topic to think about, but it's important to have a backup plan when you do find yourself in a bad situation. For most, jobs are the primary source of income, if not the only one. The last thing you want to be thinking of is how you'll cover your bills as you're on a job hunt.

But there are ways to offset this blow. If you've been contributing to an HSA, it can act as an unemployment safety net during temporarily lean times.

Pay for health insurance

One of the perks to having an HSA is that you can use these funds to pay for health insurance premiums while unemployed. Yes, that's right -- your health insurance premium counts as a qualified medical expense when you're out of work. You don't need to worry about digging into your savings, as you can just use your HSA funds until you find another job.

In order to qualify, you need to be receiving federal or state unemployment benefits. That, or you're electing to pay for COBRA or similar continuation coverage.

Use it as an emergency fund

It's your money, why not use it? The HSA is meant to help you with qualified medical expenses, so fully take advantage of it, especially when cash is tight. Use it as an emergency fund of sorts, taking money out tax-free.

If course, you can't use your HSA for just any expense. In fact, using HSA funds for non-medical expenses will result in a 25% tax penalty on the amount withdrawn. But you can use it to reimburse yourself for previous qualified medical expenses (QMEs) you've paid for out of pocket.

It's simple: Whenever you pay for a medical expense with your own money, you can reimburse yourself anytime in the future using your HSA. All you need to do is transfer money from your HSA into a checking account with the exact amount of your QME.

The cool thing is that you're allowing your HSA to compound and grow tax-free while also building up an emergency fund for possible rough patches. The funds you accumulate can be carried forward for as long as you like. For example, if you have $500 in QME in a given year, you can rest assured knowing that you can take out $500 if you find that you're out of a job and need it to pay some bills.

Listen, nobody likes to think a stressful situation such as a job loss but it's necessary. Dealing with such a blow to your finances will help if you're prepared. If you already have an HSA, rest assured that the money is there for you when you need it.

If you don't have one, it's always a good idea to find out if you're eligible and take a few minutes to open on up. Like they say, a ounce of prevention is worth a pound of cure.

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Compound It! is your weekly update of achievable, effective, no-nonsense HSA saving and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.

Taxes
Photo by bruce mars on Unsplash

Tax Facts: Self-employment and HSAs

Working for yourself has incredible benefits, one of which is the ability to make your own schedule. However, with freedom, comes responsibility.

Healthcare costs are no joke. Paying for your own medical costs can get expensive fast. Luckily, health savings accounts (HSAs) are here to help. Contributing to an HSA can help you offset taxes along with other advantages like tax deferred savings and tax free withdrawals on qualified medical expenses.

And, contributing to an HSA for self-employed folks is pretty similar to those who hold down a 9 to 5.

Do you have a high deductible health plan (HDHP)?

Choosing a healthcare provider is a little bit more of a hassle now that you're self-employed. Luckily, there are places like Healthcare.gov to help you enroll in a plan. When you do, you'll want to find out first if your insurance plan is HSA-eligible, whether you plan on opening a new HSA or using one from your previous employer.

In order to qualify to participate in an HSA, you'll need to meet the following criteria:

  • You don't have other medical coverage like Medicaid, Medicare or even FSA coverage through your spouse's' plan
  • You're enrolled in an HSA-qualified high deductible health insurance plan

Contributing to an HSA as a sole proprietor

Since you file taxes on your personal tax return, you're essentially treated like someone making HSA contributions on their own. And so you're able to deduct some of your contributions on your personal income tax return.

The good news is, as long as you made a profit during the tax year, you can file the deduction. The maximum is $3,450 (for those participating in the HDHP as single and $6,900 for those participating in the HDHP as family) or an extra $1,000 if you're 55 and older. The caveat is that you can't put more in your HSA than your net self-employment income.

Some traditional employees can contribute to their HSA on a pre-tax basis, provided their employer's plan allows for this and they are eligible to participate. However, if you're self-employed, you don't have that same luxury. You would contribute after-tax dollars to your HSA and then do a line item deduction in your Schedule C. To make sure you're getting everything right, it's best to consult a tax professional on these matters.

If you have an LLC...

As a single member LLC, you're not going to treat your HSA much differently than a sole proprietor. Though, if you have employees, you may be able to implement a plan that can allow them to make pre-tax contributions. This is what's known as a "cafeteria" or "125" plan.

The downside is that you as the owner can't participate. You can only contribute after tax dollars and it's counted towards your personal taxes. As in, you or your partner(s) can still take a deduction on a personal tax return. That means whatever you contribute towards your HSA will reduce your adjusted gross income. Just like a sole proprietor, you can only claim this deduction if you actually made a profit.

Keeping (or opening) an HSA is extremely beneficial for everyone, especially self-employed folks. Since contributing to one isn't that much different than what you've been doing, how hard can it be? As long as you're diligent about your paperwork, you can easily save on qualified medical expenses.

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Tax Facts is a weekly column offering straight up, no-nonsense HSA tax tips, written in everyday language. Look for it every Tuesday, exclusively on the HSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Taxes

Tax Facts: Can I use HSA funds abroad?

Hiking the Andes or lounging on a private Caribbean island sounds like a dream - until you sprain an ankle, or get stung by a jellyfish.

We're not trying to be downers. But, whether you're traveling for a week or a month, the last thing you want to think about is taking care of medical mishaps. In the event that you do, you might as well try to save on taxes, right?

So rest assured, you can use your HSA when traveling abroad. However, there are limitations as to what you can spend your money on tax-free. And keep in mind you may also need to pay extra fees, depending on your HSA provider.

What counts as a qualified medical expense overseas?

According to the IRS, you can purchase medications purchased in another country only if you consume them there. The medicine needs to be legal in the United States and in the country you're purchasing it from.

As for what types of drugs and medicine counts, they're technically the same ones that qualify when you're in the U.S. It must be used for medical care (general health and cosmetic purposes don't count), and needs to be legally purchased and prescribed.

You may also use your HSA funds for medical treatments, as long as they're considered legal in the country where you had the procedure done.

A few examples?

Let's say you end up getting a fever for a few days and end up going to a doctor in Canada. He decides to prescribe you antibiotics to knock it out of your system. As long as that type of antibiotics is considered legal (and can prove it was actually prescribed), it'll most likely count as a qualified medical expense if you take the antibiotics while in Canada.

Now if you were to purchase vitamins or sunscreen, these may not count. Even if it's the exact same brand you use in the U.S. it'll be hard to deduct this expense, as you could be using the sunscreen or vitamins long after your trip is over.

Should you use your HSA funds abroad?

Every little bit of savings helps, and on the surface it sounds like it makes sense to use your HSA funds when you're in another country. However, it may cost you more to do so versus paying out of pocket.

Some HSA providers provide a debit or Visa card for you to access your funds. However, if you use the card in another country, you could be charged a markup, or a conversion fee. These fees are similar to what you'd pay for any other credit card and can range anywhere from 1-3% depending on provider.

Of course, only you can decide what's the best decision for you. For example, if you paid for a pricey medical procedure that you can't pay off all in one go, using your HSA may be a smart choice. The best course of action is to bring a few medications just in case minor mishaps happen, and use common sense when traveling. That way, you can enjoy your trip and not spend most of it in the emergency room.

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Tax Facts is a weekly column offering straight up, no-nonsense HSA tax tips, written in everyday language. Look for it every Tuesday, exclusively on the HSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Eligibility

Wage Up! 3 lesser-known eye care expenses covered by your HSA

We've mentioned LASIK surgery on this page before -- and definitely recommend looking into it. But getting vision correcting surgery isn't the only way to take advantage of HSA funds. And we're not just talking about reading glasses or eye drops, either.

For those with eye care concerns - even if they're less serious - using funds from your account can save you some much needed cash. Some of these less-common expenses may even be eligible without a prescription.

Read on to find out about these lesser-known HSA-eligible procedures to take care of your eyes, and your wallet.

Cataract surgery

Cataracts are opaque or cloudy areas of your lens. When you have them, things you see tend to look blurry, hazy or even faded in color. Other symptoms include being sensitive to light, trouble seeing at night, or even seeing double.

Age is the most common reason for developing cataracts -- but that might be sooner than you think. The eye's normal proteins start to break down around 40, and vision problems may not happen until you're 60 or older. Your chances of getting cataracts may be higher if there has been a family history or if you have certain medical conditions, such as diabetes.

It's probably a good idea to consider getting the procedure done when you're finding it difficult to do everyday activities. Yes, the thought of getting eye surgery may give you the shivers, but it's a simple outpatient procedure that can be done within an hour. Your ophthalmologist will know if cataract surgery is right for you.

More serious eye surgeries

While LASIK surgery to correct your vision does count as an eligible medical expense, other more serious eye diseases and conditions also qualify. These can include glaucoma, pterygium (a non-cancerous growth over the eye) and optic nerve conditions.

The most common way to do eye surgery is using lasers. However that may be up to your doctor to decide. Some surgeries - such as treatments for glaucoma - involve draining liquid to lower and relieve eye pressure. Others include penetrating keratoplasty, which is a procedure involve replacing the entire cornea.

Instead of surgery, your ophthalmologist may recommend eye medication instead. These could include eye drops to relieve symptoms of glaucoma or Lucentis, an eye injection administered by a doctor to help restore vision.

Eye pressure monitors

These devices are for those who need to measure the intraocular pressure (IOC) of the fluid in the inside of your eyes. This is absolutely essential to help detect and monitor glaucoma. In other words, this piece of equipment is necessary if you're a glaucoma patient and need to monitor your condition.

Since consistently monitoring your eye pressure is essential to help you see how effective your treatment is, it's actually more cost-effective to purchase this machine. That's because you don't need to visit the doctor to monitor your eye pressure, which can be both costly and inconvenient.

Bottom line

Hopefully you don't need to worry about any of the above procedures and equipment. But if you do, know that you can use your HSA to help pay for these qualified medical expenses. As always, maintaining optimal health is important, so make sure you go for an eye exam every 1-2 years. And just as a friendly reminder, regular eye exams are covered with your HSA!

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Whether you're spending steadily or saving for something big, Wage Up! is where we highlight the latest services available to buy with your HSA, every Monday on the HSA Learning Center. And for everything else about your health and financial wellness, be sure to follow us on Facebook and Twitter.

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Eligibility

Wage Up! Warm weather safety with an HSA

Warmer weather means it's time to open the windows, start planning camping trips, biking around the neighborhood and more (do any of you still chase down ice cream trucks?). While we all like to have a great time, injuries and other unfortunate events can happen. That's why it's important to squirrel a bit of money away - or at least be prepared to use your HSA funds - for those "just-in-case" moments.

Allergy testing and products

Everyone seems to think allergies only happen in the spring and fall. But tell that to the people currently battling runny noses and itchy eyes, even when the thermometer looks ready to break. Summer allergies can drum up some unusual symptoms, and if you love the outdoors, it can seem really unfair.

Common allergy culprits during the summer are insect bites, mold and pollen. Getting tested for any possible allergies is helpful in determining what you may need to be cautious of. Even if you've been tested before, it doesn't hurt to get one again after some time. For example, I used to be able to eat eggs, but if I touch them now I'll break out in hives.

Getting tested for allergies counts as a qualified medical expense for both HSAs and most medical FSAs. As for which type of allergy test to get, ask your doctor which one is best. The three most common types are the skin prick test, skin injection test and patch testing. All will involve being exposed to common allergens to see how you react.

Depending on your results, you may need to get an allergy medication regimen or get some shots. Luckily, allergy medications can be covered by your HSA and most FSAs as long as you have a prescription from your doctor. Some of these include antihistamines, corticosteroids, decongestants of bronchodilators (inhalers for asthma sufferers).

Hydrotherapy

Also called aquatic therapy, hydrotherapy uses water to to treat conditions like arthritis, rheumatic conditions and even sports injuries. You do get into a warm pool but it's not like swimming at all.

Instead, you work with a physiotherapist who will guide you through various exercises. As you do so, the water helps to release tight muscles and increases blood circulation, kind of like a massage does.

Of course, it's better if you don't go too crazy in the summer. But injuries and ailments aren't exactly avoidable if you're super active in the summer. As long as you get a letter of medical necessity, hydrotherapy can be a great way to help heal those injuries.

Athletic treatments

Facing minor abrasions and injuries are common if you're going to be active in the summertime. While you may not need anything as extreme as hydrotherapy, there are items you can purchase to help deal with discomfort and pain.

Items that don't need a prescription to be HSA-eligible include ankle braces, arch support insoles, cold packs and even cast covers (on those warmer days, even broken bones won't keep us out of the water on a hot day).

Have fun, be safe

Nobody wants to think about the not so fun parts of summer activities. As always, it helps to be prepared. Start budgeting now for what you could need, just in case. This way, an ice pack or bandage is ready and waiting when it comes time to nurse those wounds.

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Whether you're spending steadily or saving for something big, Wage Up! is where we highlight the latest services available to buy with your HSA, every Monday on the HSA Learning Center. And for everything else about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Eligibility

Wage Up! A quick plan for buying health care items

Since you already have an HSA (or seriously considering one), no doubt you're someone who loves to save money. You're already saving money by using tax-free savings to use for qualified medical expenses, but there could be ways to save even more. With some patience and know-how, you can time your purchases so that you're maximizing your hard earned dollars.

Even if you find deals, you can learn how to find coupons and rebates so you practically don't have to pay full price again. Intrigued?

Is there really a best time of the year to buy health care items?

In theory, yes. However, it's not always the case. During the spring and winter months, you'll typically find cold and allergy medicines on sale. Summer is (generally) when you'll find better deals on items like sunscreen and even first-aid kits.

If you want to purchase medical equipment, you may find it harder to predict when these will go on sale, if at all. Typically, electronics are on sale around January and November, so check around those times if you can wait that long.

What can I do if I want to save money?

Just because it may be hard to predict when certain health items will go on sale, doesn't mean you can't save a few bucks here and there. Believe it or not, it's not that hard to find discounted items. Here's what you can do to maximize your chances of getting discounts:

Search for rebates

If you intend on purchasing any sort of equipment, manufacturers sometimes have promotions and offer rebates. In most cases, you can head to their official site to check for any current ones. All you really need to do is make a purchase, mail in a copy of your receipt along with the rebate coupon and you should receive a check for the amount back within the timeframe stated.

If you can't find any rebates, poke around and sign up for newsletters of brands you shop from often. Usually, they'll send out seasonal emails for promotions only subscribers will have access to. For those short on time (who isn't?), there are a ton of websites dedicated to couponing you can check out.

Install money-saving browser extensions

Those who love to shop online can rejoice - there are a ton of free browser extensions that'll help when you make purchases. Apps like Ebates, Honey and Invisible Hand help you search for promo codes and online coupons and applies automatically when you check out. Some even show you other places that offer lower prices, helping you save even more money.

Join loyalty rewards

There's no shortage of stores that offer incentives. Many have rewards cards that give you points every time you make a purchase. These points can go towards discounts on future purchases or cash back options.

For example, large pharmacy and grocery chains offer rewards points. Some stores even offer store credit cards that give you discounts or more points. If you go this route, make sure you use your credit card responsibly before signing up.

And when it comes to using your HSA, we recommend a site where there's no guesswork or concern about eligibility.

Bottom line

Just because health care is supposed to be expensive, doesn't mean it has to be. Keep a running list of items you regularly use and monitor websites and stores to see when they go on sale. It takes a little preparation on your part, but the savings you reap will be so worth it.

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Whether you're spending steadily or saving for something, Wage Up! is where we highlight the latest services available to buy with your HSA, every Monday on the HSA Learning Center. And for everything else about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Accounts

Future Healthy: Why we moved to an HSA-qualified HDHP

Last year, my husband and I decided to open a dependent care FSA (DCFSA) so that we could save money on my son's preschool expenses. It was a great decision as it lowered our taxable income and we knew we had the money set aside for a specific purpose.

However, we don't need the account for next school year — my son will get to go to preschool for free (thanks Florida!). That doesn't mean I'm not looking for ways to save money in terms of taxes and other expenses. Our current health plan allows us to open a FSA or an HSA, but we're leaning more towards an HSA. Here's why:

More flexibility

I loved our DCFSA, but it wasn't quite the best fit for our family. As in, we were only allowed to use it for my son's child care expenses. While it served us for the last year, now that we don't need to earmark that money for it anymore, we need to look for other options.

Now, to be clear, a DCFSA isn't the same as a standard health care FSA, so let's not get confused. This point was simply to highlight how different accounts can serve varying needs, depending on the family.

That said, while a traditional FSA is also a great option, for some it can be more restrictive than an HSA. Most notably, with how you need to use your funds within a calendar year and it's gone. Sure, some plans allow you to roll over up to $500 or give you a grace period to use up your funds, but that may not be flexible enough for you. What if you end up with more than $500 left over? Or you want to save up more money?

If you're considering making the move from a FSA to a high-deductible health plan with an HSA, keep this flexibility in mind. If you don't have fixed health care expenses and want the ability to set money aside in case of larger expenses, an HSA could be the best choice for you.

But don't let that deter you from exploring FSAs -- these accounts are perfect for a lot of people. For example, if you have immediate needs at the beginning of your plan year, FSA funds are available in full on day one. If that's something that fits your expected health spending, an FSA might be the right choice.

Investment options

As someone who is obsessed with maximizing their cash, the ability to invest my money in my HSA is really appealing. Of course, this will depend on your specific HSA, but once you reach a certain balance, you can invest a portion of your money into an investment account (like mutual funds).

This can be a really appealing option because your money can make money, especially if your money is going to sit there indefinitely. With an FSA, you don't really have this option.

Emergency funds are there if needed

Think of having an HSA as a long-term benefit, compared to an FSA where you need to plan out your purchases within a calendar year. If you leave your employer or are unexpectedly let go, your FSA funds are gone with limited exceptions.

With an HSA, that's not the case. The money is there until you decide to take it out. And considering the fickle nature of my line of work — freelance writing — I want to be able to have a sizable emergency fund in case work slows down or something happens to my husband's job. Having an HSA can help because I can pay for COBRA during those lean times or I can get my qualified medical expenses reimbursed.

As I'm making this transition away from an DCFSA, and still debating whether a standard FSA or an HSA is the best fit for the coming year, I'll be weighing the benefits of each. If you're making the same decision, make sure to look at your financial situation so that you can shift your mindset from FSA to an HSA owner.

And remember that just because this situation makes sense for me, doesn't mean it will make sense for you. We're big proponents of HSAs and FSAs around here and know the clear benefits of both. Whichever avenue you choose, taking the time to set aside pre-tax dollars for your future out-of-pocket medical expenses is the way to go.

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Whether it's for covering medical expenses, or planning bigger investments, our Future Healthy column will help support your path to retirement, no matter where you are on the journey. And for the latest info about your health and financial wellness, be sure to check out our HSA Learning Center, and follow us on Facebook and Twitter.

Eligibility

Wage Up! The importance of keeping your medications up-to-date

When I first met my husband he told me he had a severe allergy to bees. As in, he had to have an epi pen on him at all times because if he didn't to the hospital on time, the allergy can be life threatening. How's that for a second date?

As we grew closer and I learned about epipens, I realized that these needed to be replaced every year or so. If it expired, it's not as potent, which isn't exactly reassuring especially if you're in a life or death situation. When we lived overseas, we made sure that my husband would get a new one when we would visit the U.S. during the summer holidays.

One year, he forgot to bring the epipen back to the U.S. so that we could get it replaced. Now I know what you're thinking: why is this an issue? You see, we both lived and worked in China at the time and we had no clue how to get a epipen. Even asking locals and visiting clinics, we were never able to explain what my husband needed.

My husband told me not to worry, even though I knew his epipen expired within a few months. Sure, it wasn't going to just stop working (there's anecdotal evidence it'll still work within two to three years) but I didn't want to take the chance of us traveling overseas and have something happen to my husband.

Taking stock of your medications

Even if you don't have a serious allergy like my husband, it's still important to keep your medication updated. Whether you take one or many types of medication on a regular basis, keeping organized is crucial for your well-being. This is where you can seek the help of a professional — like your local pharmacist — on what to do to ensure your medication is up to date and other important related details.

Something to keep in mind is how you'll store your medication and proper usage. For example, I learned that my husband has to store his epipen at room temperature, so he had it in his briefcase for work by his desk and in our hallway closet when were at home.

Whatever your situation, make sure you consult your doctor to find out what you need to do. Getting organized is crucial, especially if you are planning on getting your purchases reimbursed from your FSA or HSA.

We didn't have the luxury of consulting the pharmacist that gave my husband his epipen because we were still living overseas at that point, so we kept all records that were given to us. You bet I read those papers and brochures from top to bottom so that I understood how to use it.

As for my husband's expired epipen, we kept it on hand until we were able to replace it. Luckily, we found an international hospital that was able to prescribe my husband a new one. It was expensive to do so, but so worth it.

As always, we're not doctors. Be sure to discuss any and all medication-related concerns with a qualified medical professional before making any decisions about your regimen.

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Whether you're spending steadily or saving for something big, Wage Up! is where we highlight the latest services available to buy with your HSA, every Monday on the HSA Learning Center. And for everything else about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Eligibility

Wage Up! Exploring drug-free pain relief treatments

As an avid hiker, I get a few scratches here and there considering how clumsy I tend to be. Unfortunately, I banged up my knee once all because I wanted to jump atop a big rock — and my knee smacked up against it instead.

After my shock wore off, I walked back to my car thinking I was fine. As the day wore on, I could barely move my right leg. I remember looking down and seeing a massive bruise the size of my knee.

After going to the doctor, I was prescribed some medication after determining I didn't break anything. A few weeks pass and the pain comes and goes. It wasn't unmanageable, so I braved the pain and forged on.

When you can't ignore your pain

I had a pretty hectic work schedule ahead of me — I was prepping for testing when I was still a teacher and my husband and I were packing to move — so all I did to manage the pain was to wear more supportive shoes and a knee brace. I'm not a fan of taking medication all the time (especially since I thought the pain wasn't that big of a deal) so I thought that my DIY solution was good enough for now.

As the weeks wore on, even the knee brace could only do so much. After much prodding from my husband, I finally booked an appointment with my doctor to see what was going on. The good news was that I got an appointment. The bad news was that he was on vacation for the next two weeks, so I had to wait.

So, what types of drug-free treatments are available?

I knew I had to do something while waiting to see the doctor, so I looked at other drug free treatments to ease the pain. My husband suggested I try a TENS machine which is a small battery device that applies small electric currents so that the pulsing sensation helps to reduce pain. While it worked, a few hours later the pain would return.

Something else one of my friends who regularly practices meditation suggested was using visualization and mind-body therapy. The theory is that pain can be heightened when you're stressed or reacting to pain in a negative way.

Now, I'm not a doctor, but I did have some success with some alternative-type treatments. I started practicing meditation daily and practiced reducing stress by delegating a few tasks on my to-do list to my husband and inviting friends over for coffee.

The pain didn't go away, but it did make me feel better while I was awaiting my doctors appointment.

Getting help

After going to the doctor, it was determined that I had a small fracture in my knee that was causing the swelling and pain. After doing some physical therapy and another round of medication, the pain went away. Every once in a while I'll feel a numbing pain that'll go away in a day, so I'm glad I went to do the doctor when I did before it got worse.

I'm also thankful I explored some drug-free options while I was waiting to see the doctor. If I had tax-free funds to use back then, I would have done some research to see if any of those counted as qualified medical expenses. Either way, I'm glad I made my health a priority.

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Whether you're spending steadily or saving for something big, Wage Up! is where we highlight the latest services available to buy with your HSA, every Monday on the HSA Learning Center. And for everything else about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Taxes

Tax Facts: Your HSA tax-time checklist (for before you file)

Organized or not, digging through stacks of paperwork is no fun, especially if you're still preparing before the tax deadline. Making sure you have everything ready before you file will make the difference between not hearing from the IRS to potentially getting audited (we hope not!).

Before you send in that tax return, here's a checklist of things we find helpful when doing our own filing. Be sure to speak with a qualified tax professional before making any decisions about your own situation.

Check that W2

If you work a 9 to 5, your company needs to send you a copy of your W2 by January 31. This form shows your salary, including taxes you've paid and any tax-deferred contributions like your HSA. Remember that only contributions you made through payroll will show up there so take that into consideration.

Having these numbers handy will help -- if you made contributions outside of payroll (also known as ad hoc contributions), don't forget to include those. For example, if your W2 shows a $2,500 contribution and you made a $500 ad hoc contribution, you need to put down you contributed $3,000 to your HSA.

Your 5489-SA form will also show any contributions you've made outside of a 9 to 5, such as if you're self-employed so use that when filing taxes as well.

Double check those distributions

Your 1099-SA is a HSA tax form that shows your account distributions. If you spent $1,000 last year on qualified medical expenses (QMEs), this number should be reflected on your form. But this form is only required if you got any QMEs reimbursed, so you may not need to worry about if it you didn't use your HSA at all this year.

Hopefully you'll have all your receipts organized so it matches what it says on that form. If there are any discrepancies, double check to see if the paperwork is accurate on your end. Maybe you got a few electronic receipts you forgot to add in or there was a simple miscalculation.

Any questions should be directed to your HSA provider. You'll want to do this before reporting your distributions or contributions on Form 8889.

Always check for ways to contribute more money

Maybe you took a large distribution from your HSA and you want to get the account back to what it was before, or you have higher anticipated medical expenses this year. No matter your situation, consider whether you want to max out your annual contribution before filing. In 2018, the maximum contribution was $3,450 for those participating in the health plan as individuals and $6,900 for couples or families.

Whatever amount you choose (if any), try to do it a few weeks before the tax filing deadline so that there's plenty of time for any changes to appear on your account. That way your HSA provider will have processed your contribution and you can still file your taxes before the deadline.

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Tax Facts is a weekly column offering straight up, no-nonsense HSA tax and finance tips, written in everyday language. Look for it every Tuesday, exclusively on the HSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook and Twitter.

Accounts

Compound It! When a new job is part of your new year

If that's the case, I bet you're wondering what happens to your HSA. Don't worry — that money is rightfully yours. If you did switch employers, there are a few options for your HSA. However, figuring out what to do with the HSA funds can get complicated because it can depend on a variety of factors, such as if you have your HSA funds invested, or if you're no longer on a high-deductible health plan (HDHP).

Rolling it over or leaving it be?

It's up to you on what you want to do, but if your new employer offers a better HSA than the one you currently have, consider moving your money. If not, you can maintain your current HSA as long as the HSA plan allows it If you no longer have access to a plan which allows for active HSA contributions going forward, you'll still have access to any leftover HSA money if you need it (we'll discuss this later in the article).

If you do decide to transfer your funds to a new HSA you have two choices:

  • Request a trustee to trustee transfer
  • Complete an HSA roll over

The IRS allows you to roll over your HSA funds every 12 months and still maintain the tax-free status. After you request a rollover, your current HSA provider will either send you the money via bank transfer or by mailing a check. Once you receive the funds, you'll need to deposit that money into your new HSA account ASAP.

Okay, you technically have 60 days from when you receive the funds to deposit it into the new account, but you'll want to make sure you get it deposited within that deadline. Otherwise, the IRS will count the money as a taxable contribution, meaning you'll need to pay taxes on it. You'll also face a 20% penalty.

A trustee to trustee transfer doesn't require you to touch the funds nor is there a limit on how many times you can do this each year. What happens is that you request a transfer of funds from your current HSA provider and fill out the necessary paperwork.

Afterwards, the provider will take care of the rest. The funds should land in your new HSA provider without you doing anything else and you avoid any tax and penalties.

What if I don't have an HDHP anymore?

If you no longer have an HDHP with your new employer, you can't make any more contributions to the HSA. If you have access to an HSA-qualified HDHP at your new job, your employer may or may not offer you the option of a new HSA, so it's best to check on all of your options to find out what you should do. The good news is that, regardless of your situation, you can still use the money in your past HSA for qualified expenses tax-free, even if you are no longer eligible or able to contribute..

Here's the caveat: if you've already maxed out your HSA contributions and you no longer have an HDHP in the same calendar year, you may need to withdraw some of your contributions and pay taxes on the amount you take out. HSA annual maximums apply on a 12-month basis, so if you don't participate in an HSA-eligible plan for the full year, you may need to prorate the maximum. This only counts for money you've contributed in the same year you switched jobs.

And the cost?

Something else to consider is that rolling over or transferring your HSA funds can cost you money. Before making your decision, checking with your current HSA provider to see if there are any fees and what else you need to know.

At the end of the day, your HSA funds are still available to use for qualified medical expenses and you can keep it in there as long as you need to if you're intended on treating your HSA as an investment account.

Even better news? There are lots of highly qualified financial and tax professionals out there to help guide your through these complicated changed if you need.

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Compound It! is your weekly update of achievable, effective, no-nonsense HSA saving and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter.

Basics

Future Healthy: Are you using your HSA the right way?

If you're the owner of a HSA, you probably know the benefits of your account already. You've even made a mission to max out your contributions so that you can either invest the cash, lower your taxable income or save it for a rainy day.

However, are you using your HSA the right way? Yes, there can be a right and a wrong way to use the account — one that's right or wrong for your individual situation. You want to be able to use your HSA to maximize your life and, by extension, your financial life.

Are you interested in a safety net?

As cheesy as it sounds, there's no such thing as a guarantee. And the same goes for work. Let's say you're self-employed — meaning your paycheck varies from month to month and you're enrolled in a HDHP. Ideally, you will have enough money each month set aside to pay your health premiums and prescriptions.

What happens though, when you're relying on a big payment from a client and the check gets lost in the mail?

Delays in payment is super stressful (trust me, 99% of freelancers will most likely tell you stories related to client payment woes) and your HSA can come in handy. Let's say you have a sizable chunk of cash in there and you want to pay for a doctor's visit just that month. That's what it's there for, right?

In this case, it makes sense because you're using your HSA as an emergency fund of sorts, so that you don't need to whip out a credit card to pay your bills. As in, you may risk not being able to pay the credit card in full by the end of the month leading you to get in a bit of debt.

Even if you're not self-employed, using your HSA for doctor's visits can come in handy. For example, maybe you had a bike accident and had a deep cut on your leg. In this case, you can take your HSA funds out since you're only down to a few hundred dollars in your regular checking account by the time your medical bill shows up.

You decide to negotiate with the hospital, setting up a payment plan and then paying your bills each month as part of your paycheck goes to your HSA. You can still afford all the other expenses in your life, so this is a fine option. Some people may take the money out from their HSA (assuming there is enough) and later in the year contribute more to their account.

Does an HSA make more sense than supplemental insurance?

An HSA can be helpful if you decide you want to plan for occasional medical expenses. For example, let's say you were debating whether you want to pay for dental insurance versus contributing money to your HSA and using those funds each year.

You comb through your previous year's expenses and notice that you only went for two checkups per year, including teeth cleaning. Upon more reflection, you believe your teeth are in pretty good health and that's it's cheaper to forego dental insurance and just pay for teeth cleaning out of pocket.

(To be clear, we're not advocating you forego dental insurance or making recommendations on how you should handle your benefits enrollment, we're simply outlining that situations can vary.)

Or you were debating whether or not to contribute more to your HSA funds because you want to complete a vision exam each year. Your family happens to have a history of eye disease and you want to make sure you get all possible risks check out. Opting for vision insurance and supplementing with your HSA for things like glasses or eye drops makes sense, because it may be cheaper to pay for vision insurance since if could lower the cost of your specialized eye exams.

Can you afford to invest your HSA funds?

Let's say your goal is to invest as much money as possible. You want to be able to max out all your retirement accounts — and you can afford to do so. Instead of using your HSA funds only as a way to pay for qualified medical expenses, you use it to invest in mutual funds and other types of assets.

Since you're a great saver, you open up a regular savings account for the sole purpose of using it as emergency medical fund. When you break your glasses and need new ones, you can opt to pay for it using that savings account instead of your HSA.

If you don't have the funds to do so, or your goal isn't to max out your retirement funds, you don't have to do any of the above, especially if you're going to stretch your budget too thin.

How will you use your HSA?

Bottom: there's no right or wrong way to use your HSA as long as you follow the rules. What's important is that you assess your situation carefully and make a choice that can help you save time, money and unnecessary stress. (Not to mention avoidable health concerns.) After all, an HSA is supposed to help you be healthier, right?

Whether it's for covering medical expenses, or planning bigger investments, our Future Healthy column will help support your path to retirement, no matter where you are on the journey. And for the latest info about your health and financial wellness, be sure to check out our HSA Learning Center, and follow us on Facebook and Twitter.