Eligible Expenses for HSA in 2014

If you have an HSA, or Health Savings Account, you need to know what eligible expenses are allowable in 2014 for deduction under the rules set forth by the IRS.

You can spend money from your HSA tax-free as long as it’s put towards a “qualified medical expense.” This includes all prescription medication, medical related transportation, regular doctor bills, and other allowable costs as defined below. These expenses are paid by you until your health insurance deductible is met, at which time your policy takes over, as defined by your plan.

If you spend funds on non-qualified expenses, the IRS taxes you at your regular income rate in addition to a penalty equaling 20% of the amount you spent. This rule only applies to those under 65.

One of the great things about an HSA is that you can spend money on any eligible expense, even if that medical cost isn’t covered under your High Deductible Health Plan. So for example, if your health plan doesn’t cover vision correction surgery, in most cases you can cover that expense from your non-taxed funds. This also applies to expense incurred by your spouse and dependents. You are allowed to pay for their qualifying medical bills as well, even if they receive coverage from a separate insurance policy.

An oft asked questions is if you can use your HSA towards monthly health insurance premiums. The answer is generally no, unless you participate in Medicare, in which case you can pay for any premiums except Medicare Supplement policies. You are also allowed to use your HSA funds to cover insurance premiums in cases where you are unemployed and collecting qualified benefits, or you have continuing COBRA coverage.