How to Use HSA Funds for Emergency
The purpose of a health savings account, or HSA, is to help consumers take charge of their health care. By putting money away in a health savings account, consumers can get a tax break up front, then use those tax-advantaged dollars to pay for legitimate medical services not covered by their insurance plans. When money is withdrawn from the plan to pay for a medical emergency, there are no tax consequences. But if the emergency is not medical in nature, the IRS will assess a penalty to the amount withdrawn.
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Instructions
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Determine how much money you need to withdraw from your HSA to cover the emergency. Keep in mind that you will be assessed a tax penalty if the money withdrawn is not used for legitimate medical expenses.
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Find a copy of your most recent HSA statement to see how much you have on deposit. Some HSA plan administrators allow customers to check their balances online.
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Call the customer service number for the HSA administrator and let them know you want to withdraw money from the account. Complete any paperwork needed. In some cases you may be able to complete the necessary paperwork online.
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Make a copy of the withdrawal request for your records and keep it with your tax paperwork. You will need to report the HSA withdrawal to the IRS when you do your taxes.
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Use a quality tax preparation sotware package to estimate the taxes you will owe on the HSA withdrawal. If you use the money from the HSA to cover medical treatment resulting from an emergency, you will not owe any taxes or penalties.
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References
- Photo Credit medical equipment image by blaine stiger from Fotolia.com
