How to Sweeten Your
HSA with More Savings
December 1, 2011
Vol. 7, Issue 9
Sure, it’s great to save money on low premiums and taxes, but did you realize that your HSA can help you save with rebates on Christmas shopping? I’ll explain how to do that, how to tell what can be purchased with pre-tax HSA money, and how to get the maximum savings if you’re self-employed, all in this issue. That will put you in the holiday spirit, right?
My HSA Rewards
To help make funding your HSA easier, HSA for America is proud to announce a special program called My HSA Rewards. When you shop with major retailers (like Barnes & Noble, Netflix, Starbucks, Target and others), you will automatically earn cash rewards of 0.5 percent to 25 percent on qualifying purchases.
You can transfer your cash-back earnings directly into your HSA as a tax-deductible contribution when the balance totals $50 or more. To sign up (at no cost to you), just click My HSA Rewards. Of course, you can earn cash back on a lot more than Christmas gifts.
Get the Most from Your Pre-tax HSA Dollars
Did you know that you can use pre-tax HSA dollars to pay for chiropractic services and massage therapy when medically necessary? Contact lenses and laser eye surgery are also qualified. Need help to quit smoking? That works, too. When you’re not sure if something is HSA qualified, check our list of qualified expenses or the IRS Publication 502.
Basically, what you spend to treat an illness or injury can come from your HSA, but non-specific health-related expenses (like gym memberships or running shoes) cannot.
If you are getting unemployment benefits, you can pay your health insurance premiums from your HSA. And, remember that you cannot use HSA money for over-the-counter medicine (like aspirin) unless your doctor prescribes it.
HSA New Year’s Resolutions
January 1 is first day you can contribute to your HSA for the 2012 tax year, but you have up to April 17th to make the maximum annual contribution for 2011. That’s $3,050 for self-coverage or $6,150 for families for 2011. For 2012, it’s increasing to $3,100 for individuals and $6,250 for families. If you are at least age 55, you can deposit an additional $1,000 for both 2011 and 2012.
Opening your HSA as soon as possible (even with a minimum deposit) could mean you can run more expenses through your HSA to make them tax deductible. For expenses incurred after the HSA has been established, you can reimburse yourself later by making an after-the-fact HSA deposit.
Still deciding where to open your account? HSA Bank is our most popular administrator, and that’s where I personally have my HSA.
Health Reimbursement Arrangement Deadline Dec 31
Most of our married, self-employed clients set up a Health Reimbursement Arrangement (HRA) to lower their tax bill even more. A HRA can enable your business to reimburse your family for out-of-pocket health care expenses, including health insurance premiums, as a tax-free fringe benefit. This is saving our average client over $4,000. You can set up a HRA if your spouse works at least part time in your business.
You have until December 31 to set up a HRA for 2011, and earn an additional 13.3 percent tax write-off for the entire year. To make it easier for you, I recorded a short call where we discuss how to set up a HRA quickly and inexpensively, as well as how these arrangements work. You can listen to that call and learn more about these arrangements at our website www.HSAforAmerica.com/HRA.htm. It’s easy to set up your HRA there, but call our HRA department at 1-800-913-0172 if you have any questions.
If you qualify for an HRA, you may also want to have your business make your employee/spouse’s HSA contribution. If you are in a 28-percent federal tax bracket and live in a state with five-percent income tax, a $6,150 HSA contribution will reduce your April 17 IRS bill by $2,029.50. That’s not bad, but if your business makes that contribution, the total tax savings increase to $2,847.45! An extra $818 could pay off some debt, buy new office equipment or you just might want to splurge a little on yourself.