I currently have an HSA and a qualified HDHP. I am planning to move to another state and may get something other than a HDHP after I relocate. I have been making contributions to my HSA for several years and have built up a sizable balance in the account. If I obtain a new health insurance policy that does not qualify for a HSA, can I continue to spend the balance of my HSA account on qualified medical expenses? Or do I need to wait to withdraw it until after I am 59 1/2?
You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, co-pays, and coinsurance under any part of Medicare. Once you turn age 65, you can also use your account to pay for things other than medical expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 10% penalty on the amount withdrawn. Answer by moderator — June 30, 2009 @ 2:19 pm No CommentsNo comments yet. Leave a comment |
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Once you have deposited funds into a health savings account (HSA), you can use these funds to pay for qualified medical expenses tax-free. This is true even if you no longer have coverage under a High Deductible Health Plans (HDHP). Your account roll automatically roll over every year and will remain in the account in left unused. There is no time limit on using the funds. If you are no longer insured under an HDHP, you can no longer make annual contributions into your HSA. If you regain HDHP coverage at a later date, you can begin making contributions to your HSA again.
