Navigating the intersection of high-deductible health plans (HDHP) and health savings accounts (HSA) isn’t just about knowing the rules. It’s about understanding how to apply them to maximize your clients’ tax benefits.
Whether you’re determining eligibility, addressing excess contributions or preparing Form 8889, you need the confidence to guide every HSA conversation with clarity and accuracy.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their corresponding answers. If you attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: What is the best way to determine if the client has a qualified HDHP that is eligible for making contributions to an HSA if the client is not sure?
A: The taxpayer must ask the health plan provider if their plan qualifies as an HSA-eligible HDHP .
Q: Can an IRA with ultimate taxes owed on it fund an HSA, where no tax is due if used correctly?
A: Correct. It is a one-time funding that is a trustee-to-trustee transfer. The transferred amount is not taxable if used for qualified medical expenses.
Q: The client opens an HSA and invests contributions for many years. Can medical bills incurred after opening the HSA be eligible for reimbursement, even if submitted for reimbursement years in the future (after the account has grown)?
A: Yes, the taxpayer can pay medical bills from their checking account, save them until they want reimbursement from their HSA account and take a lump sum out for the medical expenses.
Q: Can the cost of yoga classes be a qualified medical expense for HSA purposes?
A: No, if only for the improvement of general health. If they have a doctor’s letter for treatment of a medical condition, then it would be a qualified medical expense.
To learn more about handling HSA contributions and distributions, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.