Can i pay premiums from my hsa

Why Zacks? Learn to Be a Better Investor. Forgot Password. Health savings accounts offer tax benefits for saving for future health costs. However, not all medical insurance premiums are allowed as qualified expenses when you take withdrawals. If you take money out and use it on non-qualified premiums, you're going to be on the hook for extra taxes and penalties on the distribution.

Only certain insurance premiums count as qualified expenses from your HSA. Eligible premiums include long-term care insurance, continuation insurance such as COBRA, health care while you're receiving unemployment under state or federal law, and Medicare coverage after you turn When you take distributions to pay these costs, like any other qualified expense, the money comes out tax-free and penalty-free from your HSA.

The long-term care insurance premiums you can count as qualified expenses are limited based on the age of the beneficiary. John, D'Monte. First name is required. First name can not exceed 30 characters. Please enter a valid last name. Last name is required. Last name can not exceed 60 characters. Enter a valid email address. Email is required. Email address must be 5 characters at minimum. Email address can not exceed characters. Please enter a valid email address.

Thank you for subscribing. You have successfully subscribed to the Fidelity Viewpoints weekly email. You should begin receiving the email in 7—10 business days. We were unable to process your request. Please Click Here to go to Viewpoints signup page. Actual assets needed may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The calculation takes into account cost-sharing provisions such as deductibles and coinsurance associated with Medicare Part A and Part B inpatient and outpatient medical insurance.

It also considers Medicare Part D prescription drug coverage premiums and out-of-pocket costs, as well as certain services excluded by Original Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care. This information is intended to be educational and is not tailored to the investment needs of any specific investor.

The direct purchase of precious metals and other collectibles in an IRA or other retirement plan account can result in a taxable distribution from that account except as specifically provided under IRS rules. Some ETF sponsors include a statement in the prospectus that an IRS ruling was obtained providing that the purchase of the ETF in an IRA or retirement plan account will not constitute the acquisition of a collectible and as a result will not be treated as a taxable distribution.

The information provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA.

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You know a health savings account HSA helps pay for out-of-pocket medical costs, but it may surprise you to learn that this tax-advantaged account could be a superior retirement savings vehicle, too. It has become ingrained in us that we should max out our k or other workplace- defined contribution plan as the best way to save for retirement.

This is certainly good advice. But should those health-cost savings plans also be maxed out in a similar fashion? Here is a look at what these accounts are, who can open one, and how to make the best use of an HSA for your retirement if you are fortunate enough to have one. HSAs are tax-advantaged savings accounts designed to help people who have high-deductible health plans HDHPs pay for out-of-pocket medical expenses.

While these accounts have been available since , too few eligible Americans are taking advantage of them. EBRI found that virtually no one contributes the maximum, and nearly everyone takes current distributions to pay for medical expenses. An HSA's triple tax advantage, which is similar to that of a traditional k plan or IRA, makes it a top-notch way to save for retirement. Your contributions to an HSA can be made via payroll deductions, as well as from your own funds. If the latter, they are tax-deductible , even if you don't itemize.

If they're made from your own funds, they're considered to be made on a pre-tax basis, meaning that they reduce your federal and state income tax liability —and they're not subject to FICA taxes, either. Your account balance grows tax-free. Any interest, dividends, or capital gains you earn are nontaxable. Any contributions your employer makes to your HSA do not have to be counted as part of your taxable income.

Withdrawals for qualified medical expenses are tax-free. Once you begin to withdraw funds from those plans, you pay income tax on that money, regardless of how the funds are being used. The account can remain untouched as long as you like, although you are no longer allowed to contribute once you enroll in Medicare. You become eligible for Medicare at age What's more, the balance can be carried over from year to year; you are not legally obligated to "use it or lose it," as with a flexible spending account FSA.

An HSA can move with you to a new job, too. You own the account, not your employer, which means the account is fully portable and goes when and where you do. To qualify for an HSA, you must have a high-deductible health plan and no other health insurance. You must not yet qualify for Medicare, and you cannot be claimed as a dependent on someone else's tax return. A primary concern many consumers have about foregoing a preferred provider organization PPO , health maintenance organization HMO plan, or other health insurance in favor of a high-deductible health plan is that they will not be able to afford their medical expenses.

High expenses can be one reason these plans are more popular among affluent families who will benefit from the tax advantages and can afford the risk.

With an HDHP, by contrast, you're spending more closely matches your actual healthcare needs. Of course, if you know your healthcare costs are likely to be high—a woman who is pregnant, for instance, or someone with a chronic medical condition—a health plan with a high deductible may not be the best choice for you. But keep in mind that HDHPs completely cover some preventive care services before you meet your deductible.

All in all, an HDHP might be more budget-friendly than you think—especially when you consider its advantages for retirement. As mentioned above, your HSA contributions are tax-deductible until you sign up for Medicare. The contribution limits are adjusted annually for inflation.

The contribution limit for a family health savings account in You can contribute up to the maximum regardless of your income, and your entire contribution is tax-deductible. You can even contribute in years when you have no income. You can also contribute if you're self-employed. This may sound counterintuitive, but we're looking at an HSA primarily as an investment tool. Granted, the basic idea behind an HSA is to give people with a high-deductible health plan a tax break to make their out-of-pocket medical expenses more manageable.

But that triple tax advantage means that the best way to use an HSA is to treat it as an investment tool that will improve your financial picture in retirement. And the best way to do that is to never spend your HSA contributions during your working years and pay cash out of pocket for your medical bills.