Qualified medical expenses
Q: Can I use my Health Savings Account (HSA) for over-the-counter (OTC) cough medicines?
A: This question gets to the heart of the coolest benefit from an HSA plan. The savings account portion is meant to cover the deductible expenses that you incur now that the deductible is much higher than a traditional indemnity plan. However, you are not limited to just insurance-covered items when using the savings account portion. There is a list issued by the provider of the HSA portion (bank, credit union, etc) of “Qualified Medical Expenses”. In general, these line up with the amounts that you can claim on Schedule A of your tax return each year. Over-the-counter medicines are covered in certain cases as well.
Here is the scenario: Let’s say you have contributed $750 to the savings account portion of the HSA plan. You have a debit card to access these funds. You have a terrible cough and your health care provider prescribed an anti-biotic and an OTC cough suppressant. In the old days, you would go to the pharmacy, pay for the prescription, buy the cough syrup and be able to claim only the prescription on your taxes. With an HSA, all of this can be paid with pre-tax dollars using your HSA debit card. It is up to you to keep track of what you spent the money on in case of an audit. You can’t buy groceries with your account obviously.
Following are some links to Qualified Medical Expense lists from some HSA providers:
Wells Fargo – http://www.wfhbs.com/docs/WFHBS_HBSEligibleExpenses.pdf
HSA for America – http://www.health–savings–accounts.com/qualified-expenses.htm
IRS – Publication 502, http://www.irs.gov/pub/irs-pdf/p502.pdf
Health Equity – http://selecthealth.org/Static/Files/qualifiedexpenses.pdf
Golden Rule Insurance – http://www.goldenrule.com/pdf/31237o07.pdf
Hopefully this can get you started. HSAs are the way of the future. The more you can learn now, the easier the transition will be when you company begins to offer this type of plan.
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