Wednesday, April 16, 2014

HSA and LTCi: What a match!

Long term readers know that we're big fans of both Health Savings Accounts (HSAs) and Long Term Care insurance (LTCi). What a lot of folks may not know, though, is that these two seemingly unrelated risk-management tools can actually work together to help you stretch your health care dollars.

How that, you ask?

According to FoIB (and LTCi Guru) Randy Gallas:

"If you're not eligible to deduct your LTCi premiums through self-employment or as an unreiumbursed medical expense on your federal income tax return, HSA funds may be an attractive option. Since LTCi premiums are considered a qualified medical expense, folks who who meet the criteria may withdraw money tax-free from their HSA to pay premiums."

Go on....

"Consider this example: you're 52 years old and looking for a tax-advantaged means of paying your LTCi premium (and good for you for buying at an early age!). You don't own a business so, so you can't deduct premiums as a self-employed person. Your accountant told you that you can't deduct the premiums as unreimbursed medical expenses. But if you own an HSA (or are eligible to open one),you may be able to use tax-advantaged funds from that account to pay that LTCi premium."

Randy also points out that there are are some limitations and considerations for people who have HSA accounts or those who are eligible, and provides this link to a more complete explanation of those.

Thanks, Randy!
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