Linda Wallace, CPA, CEBS, senior manager at Blue and Co., CPAs, in Carmel, Indiana, makes these points about Health Savings Accounts:
- HSA funds are accumulated tax free.
- Withdrawals are tax free when used for current, qualified medical expense reimbursements.
- Clients who choose not to use HSA funds currently can use the HSA as an investment for the future.
- Withdrawals from an HSA can be made at any time; the account holder needs to retain receipts for the expenses.
- Medicare recipients are not eligible to make contributions to an HSA but they are still able to draw on the account to reimburse for qualified medical expenses.
- Companies considering setting up HSAs for their employees consider the expenses that will be charged by the HSA custodian.