Health savings accounts (HSAs) are often overlooked opportunities to help cover the costs of long-term care with tax-free money. There are a few ways that you can make the most of your HSA assets to help cover medical and long-term care expenses.
It’s possible to tap your HSA – tax free – to pay for qualified long-term care insurance premiums. However, the IRS will only allow you to pay for long term care insurance with your HSA in certain situations. Insurance premiums are generally not treated as qualified medical expenses by the IRS, unless those premiums are for:
- Qualified long-term care insurance (most policies currently on the market are qualified)
- Health care continuation coverage
- Health care coverage while receiving unemployment compensation
- Medicare and other coverage for those who are 65 and older
HSA funds can also be used to pay for:
- COBRA coverage
- Health care coverage while unemployed
- Medicare
- Other health coverage once you or your loved one is age 65 or older
- Qualified long-term care services