Can I Use My Hsa to Pay for My Spouse Medicare Premiums
Tin I Pay My Insurance Premiums From My HSA?
A express amount of long-term intendance premiums can be paid from HSAs.
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Health savings accounts offer taxation benefits for saving for hereafter health costs. Yet, not all medical insurance premiums are allowed every bit qualified expenses when yous take withdrawals. If you lot accept money out and use it on non-qualified premiums, you lot're going to be on the hook for extra taxes and penalties on the distribution.
Qualified Premiums
Just 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 nether state or federal law, and Medicare coverage after yous turn 65. When you lot take distributions to pay these costs, like any other qualified expense, the money comes out tax-free and penalty-free from your HSA.
Limits on Qualified Premiums
The long-term care insurance premiums yous can count as qualified expenses are limited based on the age of the casher. For example, if the casher is under 40 at the finish of 2012, y'all tin merely count up to $350 as a qualified expense. Payments for continuing insurance and insurance while you're unemployed are qualified, and that includes premiums you pay for your spouse and your dependents. Notwithstanding, if you're under 65, yous tin can't utilize your HSA to pay for your spouse'south Medicare fifty-fifty if your spouse is over 65.
Not-Qualified Expenses
You lot can have coin out of your HSA for other insurance premiums, just those withdrawals count as nonqualified withdrawals. Equally a result, you have to pay taxes and a 20 pct penalisation on the withdrawal. There are limited exceptions from the punishment, such equally if y'all're permanently disabled, over 65 years former or taking distributions as a beneficiary, but those won't be tax-free -- merely penalty-free.
Tax Reporting
Whether your insurance premiums qualify or not, you still have to report the distribution on your taxes. If you spend the coin on qualified insurance premiums, study the withdrawal on Form 8889. If it's not qualified, you must also figure the xx percent early withdrawal penalty on Class 8889 and include the distribution on line 21 of Grade 1040 as taxable income. It'due south taxed just like other ordinary income -- the college your tax subclass, the more you pay.
References
Author Bio
Based in the Kansas City surface area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."
Source: https://finance.zacks.com/can-pay-insurance-premiums-hsa-7123.html
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