Presented by: Keith Altobelli, EA
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At the end of this webinar, you should be able to: Recognize the benefits of Health Savings Accounts (HSAs) Identify Eligibility Requirements Determine deductible and contribution amounts for HSAs Recognize the difference between Health Savings Accounts, Archer MSAs and Long Term Insurance Contracts 3
Additional Reading: Publication 969 Health Savings Accounts and other Tax Favored Health Plans Publication 502 Medical and Dental Expenses Instructions for Form 8889 Health Savings Accounts (HSAs) Instructions for Form 8853 Archer MSAs and Long-Term Insurance Contracts 4
Benefits: 1. Contributions made reduce taxable income 2. Can be deducted whether itemize or not 3. Employer contributions not included in income 4. Contributions remain in the account if unused 5. Distributions are not taxable as income (if reported correctly on taxes)
Qualified Medical Expenses: Preventive care Only HSA Non Cosmetic Non Homeopathic Non Reimbursed Prescription Pub. 502 Medical and Dental Expenses
Shhhhhh! Don t need IRS O.K. Don t need to itemize Set up by yourself Don t need to drain account Don t pay tax on interest Don t pay tax on distributions Don t lose it when you move You control how money is spent
Eligibility: HDHP (choice matters) No other coverage No Medicare (A or B) Not claimed as dependent No joint accounts Can even be unemployed Lifetime benefits limited OOP Limited
Play Well With Others? VA TRICARE Specific Disease Discount Cards EAP FSA HRA Spouse FSA/HRA
Fill the bucket up to 4/15 Employment (or not) Savings Dividends Unemployment Welfare Cash only IRA or Roth (1 time!) Archer MSA Other HSA Anyone can contribute
Empty The Bucket Preventive Care (969 p. 3) Screening Services Pub. 502 Prescription Insulin LTC, COBRA, Unemployed Nothing before plan start TP and Spouse Dependents on return
20% Additional Tax!
Mainly filled from W2 Box 12 W Filled from 1099 SA
My Cup Runneth Over Considered Income (Line 21) 6% Excise Tax (Form 5329) Withdraw!
Engaged in prohibited activity Used funds as security for loan Borrowing Prohibited!
Spouse is beneficiary: Spouse has a new HSA Spouse in not beneficiary Ceases HSA status Fair market value is taxable
Just call me Archer
Don t need to itemize Don t need to drain account Don t pay tax on interest Don t pay tax on distributions Don t lose it when you move No new accounts can be opened Can still fund existing accounts
IF: HDHP No other coverage No Medicare Not eligible as dependent Except: Work Comp Specific disease or illness Fixed amount per day Accident, Disability, Dental, Vision, LTC
Self-only coverage Family coverage Minimum annual deductible $2,200 $4,450 Maximum annual deductible $3,300 $6,650 Maximum annual out-of-pocket expenses $4,450 $8,150
You OR Employer Annual Deductible Limit Income Limit Excessive Contributions
Distributions Deemed Distributions Death of MSA Holder
Designated by Medicare to pay qualified medical expenses Must be enrolled in Medicare and have HDHP Medicare payments direct deposited Not taxed if used correctly Can earn interest and dividends Administered through Medicare program Use Form 8853 to report
Considered Accident and Health Insurance Contract Generally excluded from income To claim exclusion for per diem payments, 8853 Section C $330/day excluded (2015) Excess reported on 1040 line 21
Employee Reimbursement for medical expenses Do not have to have health care plan to use Must be employed No self employed person Employer contributions not taxed No taxes on contributions No tax on withdrawals Must designate amount Deducted throughout year Cannot deduct more than $2,500 Qualified Medical Expenses (Pub 502) Use it or lose it 2 ½ month exception
Employee Reimbursement for medical expenses Do not have to have health care plan to use Employer contributions not taxed No tax on reimbursements Unused amounts carry forward Whenever No limit Employer current and prior Spouse and dependents Qualified Medical Expenses (Pub 502) Cannot be refunded to you