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When health savings accounts were created in 2003, anyone enrolled in a high-deductible health plan had a new way to buffer the financial burden of health-related costs not covered under their plan. HSAs can be a very beneficial personal finance tool, with a high APY, generous contribution limits, and tax-free deposits and withdrawals — providing, of course, that they're used only for medical expenses that qualify under your insurance plan.
Aside from doctor's office visits, prescriptions and the like, we don't tend to hear too much about what else qualifies as an HSA-OK medical expense. Do you have an HSA and want to start putting your savings to good use? Scroll through this list to find out what you can use those funds for.
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It may surprise you to know that your HSA dollars can fund this procedure; it's a mainstream medicinal practice in China, but still considered alternative in the West. Acupuncture involves the insertion of fine needles just below the surface of the skin, placed at determined points to treat everything from chronic pain to allergies or depression. The intent is to channel and balance the patient's life force, or "chi," so it's not invasive in the same sense as needles usually are.
2. Guide Dogs and Service Animals
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Disabled or sight-impaired people who've received authorization from their doctor for a seeing-eye dog or other medical service animal can use their HSA savings towards buying, training and maintaining them. Food, inoculations and veterinary care all qualify as expenses allowed under your HSA.
3. Sperm Storage
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If you're looking to donate as much as possible to a sperm bank, it doesn't qualify for HSA reimbursement. But fees associated with temporary sperm storage for what's called "immediate conception" do qualify, with authorization from your doctor. (While we're at it, go ahead and ask him or her for that Viagra prescription — HSAs will pay for those out-of-pocket costs, too, as well as other pregnancy-related items, like fertility treatments and pregnancy testing devices.)
4. Umbilical Cord Freezing and Storage
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An HSA can also help pay for the sub-freezing storage of your newborn son or daughter's umbilical cord once they've been born. However, there are restrictions here, too; in order to qualify it as an HSA expense, parents must prove that the cord will be used to treat a particular medical condition. (Umbilical cord blood contains stem cells, which can be used as a treatment for children suffering from leukemia and other blood-related diseases.)
5. Home Improvements
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HSA money can't comp you for a new kitchen remodel, man cave or hot tub. But it can finance any modifications you make to your house, like wheelchair ramps, railways, support bars, moved outlets, cabinets and doors, and other modifications for disabled residents that improve quality of life. The improvement costs must usually exceed the increase in your home's value to qualify for full HSA payment.
6. Massage Therapy/Chiropractor
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Your HSA has got the back of those weekly or bi-weekly chiropractor's adjustments 100 percent. Massage therapy might also qualify for HSA compensation, with conditions; it's considered "dual purpose," meaning that your massage session must be for the treatment of a specific medical condition. You'll need a prescription from your chiropractor or M.D.
7. Preventive Dental Treatments
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Considering the high costs of dentistry and orthodontic work, we should all be smiling our pearly whites if it was paid for by an HSA. According to the Internal Revenue Service, HSA-worthy dentist office visits include "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.” Procedures like teeth whitening or veneers don't qualify, since they're cosmetic in nature.
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HSA savings can also be used toward medical-related transportation expenses, like trips to doctors' offices or outpatient surgical procedures. Make sure to keep a very detailed record of your travel mileage, and any money spent on gas, parking garage fees or other vehicle maintenance, since the dollars out of your pocket can add up. If you don't own a car and take public transportation, get a receipt as proof. Are you in a recovery program like Alcoholics Anonymous? Group therapy transportation services are another qualifying expense an HSA will reimburse.
9. Lodging/In-Patient Costs
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Like transportation fees, an HSA will pay for lodging fees incurred at hospitals or other facilities, if the primary reason for your stay is for medical care. Patients staying in a short- or long-term drug treatment center can also have their expenses repaid through their HSA fund. Like transportation, experts advise to be very specific in the information you provide to the IRS if you'd like to pursue complete reimbursement.
10. Wigs and Prostheses
If you rely on the use of a prosthetic limb or device, or wear a wig due to hair loss from chemotherapy or medications — or, your head needed shaving for surgery — an HSA will pay the costs of the accessory. Like the other qualifying expenses in this list, a doctor's written permission will often be needed to submit to the IRS for reimbursement.
Know Your Health Savings Account
You've been putting time, effort and money into your HSA, so remember what you can and can't use those dollars for. If your insurance has already paid for a treatment or service, it doesn't qualify for HSA reimbursement. Over-the-counter, non-prescription medications also aren't qualified. HSA money can also be used toward your retirement funding, but it'll be taxed. Thinking of opening an HSA in the new year? Keep these fast facts in mind:
- For 2014/2015, individuals can contribute a maximum of $3,350 to their HSA.
- Families can contribute a maximum $6,650.
- HSA account holders 55 and older can make annual "catch-up" contributions up to $1,000 until enrolled in Medicare.
- Account holders 65 and older can withdraw their money for any reason, tax-free.