HDHP's and HSA's Flashcards
Last month rule
If eligible under HDHP on the first day of the last month of tax year may fund HSA as if eligible for the entire year.
How do you determine if a plan is eligible for HDHP
Minimum Deductible must be met, if can be higher but not lower. Maximum out of pocket amount is the maximum amount and includes the deductible amount. (i.e. family $20,000 out of pocket limit does not qualify since it is greater than $16,150)
How are HSA withdrawals for qualified medical expenses treated?
Tax-Free
How are HSA withdrawals prior to age 65 not used for qualified medical expenses treated?
Regular income tax plus 20% penalty
How are HSA withdrawals after age 65 not used for qualified medical expenses treated?
Regular income tax
What happens to HSA once enrolled in Medicare?
May maintain fund/use for qualified medical expenses but no longer contribute
Can you fund an HSA with and IRA
Yes, can make one direct transfer from IRA to fund HSA up to the annual limit for that year
Once per lifetime
What are the HSA tax advantages?
Contributions are tax deductible, earnings grow tax free, and withdrawals are tax-free when used for qualified medical expenses.
Are “Cosmetic” expenses a qualified healthcare expense for use of HSA?
NO
Are over the counter medicines, dental care and vision care qualified healthcare expenses for HSA use?
Yes
