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Health Savings Account Insurance Plans Question & Answers

2013 October 19
by Sarah Fields

James asks…

Can I use my Health Savings Account to pay my portion of a dental visit?

I have a high deductible health plan and a Health Savings Account, but I don’t know what it covers.

How would I find out? Do I ask at the credit union or the health insurance provider?

Sarah Fields answers:

IRS publication 502 Mecial and Dental Expenses states:

“You can include in medical expenses the amounts you pay for the prevention and alleviation of dental disease. Preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants, and fluoride treatments to prevent tooth decay. Treatment to alleviate dental disease include services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental ailments. But see Teeth Whitening under What Expenses Are Not Includible, later.”

Carol asks…

What can I do with my health savings account when I leave my job.?

I’m planning on leave my job to go back to school and get an part time job. I have a HSA (Health Savings Account). When I leave my job, what can I do with my HSA? Can I still use it for medical, prescriptions, etc? Or can I withdrawal the money for my own use?

Sarah Fields answers:

I think we are talking about the same thing. I have a Flexible Spending Account (FSA) from my previous job that I use for copays, prescriptions, etc. When I left that job, they cut off my debit card, but I can still use the money for those same reasons, I just have to fax the request in.

My understanding (from the insurance agent) is that the company can request you give any unpaid amount that is in your account (e.g., unpaid because you were paying in monthly and now you won’t be doing that anymore) back, but they can’t demand it. You should still use it all by the same date you would have had you stayed at the job.

And, no, I wouldn’t just withdraw it. That would most likely get reported and lead to the deferred tax status being revoked (it would become taxable income — increasing your tax base), and knowing the IRS, there is probably a penalty tax you’d have to pay also.

You just have to weigh it. If it’s $50, who cares. If it’s enough to matter, then follow what I said above.

Donna asks…

How do Health Savings Accounts work?

I have a $5000 deductible on my health insurance plan. I am 39 years old and am in good health. I go to the doctor less than once a year. Would this type of account benefit me if I should need to receive health care? How much can I put in? Where can I start such a plan? If I put money in does it have to be used by a certain time like the flex spending accounts?

Sarah Fields answers:

I’m not entirely sure a health savings account would benefit you unless you use a lot of medication or doctors’ visits. The catch to health savings accounts (HSAs) is that you are only allowed to use funds on a certain list of products (see this list: http://health401k.com/hsafaq.aspx). Also, you are right about the similarily with FSAs; funds in HSAs do have to be used up after each year or they will be wasted.

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