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How can I use my HSA?

Who is this for?

Michigan Health Insurance – Customer Service – Health Spending Accounts

If you have a health savings account, or HSA, linked to your plan, this information can help you learn how to use it to pay for medical expenses.

Health savings accounts are a great way to save money. They also let you make more decisions about how you spend your money on health care expenses. Here's how you can use an HSA to pay for today’s health care expenses and save for tomorrow’s, tax-free.

1. Choose a plan that pairs with an HSA. You can choose from the following employer-sponsored or individual and family plans:

Employer-sponsored Simply Blue℠ HSA PPO
For individuals and families Blue Cross® Partnered Bronze
Blue Cross® Metro Detroit HMO Bronze
Blue Cross® Select Bronze
Blue Cross® Preferred Bronze
Blue Cross® Metro Detroit EPO Bronze
Blue Cross® Premier Bronze
Blue Cross® Metro Detroit EPO Silver
Blue Cross® Premier Silver
Blue Cross® Silver with Dental and Vision, a Multi-State Plan

2. Open an HSA. Most of our members open their health savings accounts through us. But you can also open an HSA at most banks, credit unions, insurance companies and other financial institutions. Employer-sponsored health plans compatible with an HSA may partner with a bank you can use.

If you open an HSA through us, you can see your claims and pay your provider with funds from your HSA, all in one place.

  • In 2015, the most money you could put into your HSA in one year is $3,350 for individuals and $6,650 for family coverage. These amounts are adjusted annually by the federal government.
  • If you don’t use all the money in your account by the end of the calendar year, it rolls over to the next year.
3. Contribute to your HSA. You, your employer and even friends and relatives can put money in your HSA. That money is either not taxed or tax-deductible, so everyone saves.

Tip: You may contribute the maximum amount for the year as long as you have coverage by Dec. 1. Make sure you stay in the plan for the following year, or you’ll have to pay taxes and penalties.

4. Use the money in your HSA. You control how the money in your HSA is spent. You can:

  • Pay your copay, coinsurance and deductibles for services covered by your plan
  • Pay for qualified medical expenses not covered by your plan
  • Pay for qualified medical expenses for yourself, your spouse or your dependents

Qualified medical expenses include most medical care, dental and vision care and over-the-counter drugs. For more information on qualified medical expenses, visit the IRS website, or see one of these publications:

If you use money in your HSA for something other than a qualified medical expense, you'll have to pay income taxes on that amount. And, you'll have to pay a 20 percent tax penalty, unless you are disabled or over age 65.

5. Pay for your qualified medical expenses from your HSA. In most cases, you’ll get a checkbook or debit card with your HSA that you can use to pay your doctor or pharmacist. If this feature is not offered, you can pay for your services upfront and reimburse yourself from the money in your HSA.

Generally you can’t use the money in your HSA to pay for medical insurance premiums. You can use it to pay for:

  • Any health care plan while receiving federal or state unemployment benefits
  • COBRA continuation coverage after leaving employment with a company that offers health insurance coverage
  • Qualified long-term care insurance
  • Premiums and out-of-pocket expenses, including deductibles, copays, and coinsurance for any part of Medicare

Tip: Keep your health care-related receipts, in case of a tax audit.

You can use your account to pay for things other than medical expenses. You’ll have to pay income tax on any amount you withdraw to pay for non-medical expenses, but you won’t be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 20 percent penalty on the amount withdrawn.

6. Invest your money. You can invest the money in your HSA the same as an IRA. You can invest it in stocks, bonds and mutual funds.

7. Enjoy your retirement. When you turn 65 and enroll in Medicare, you can’t contribute to your HSA anymore. You can keep using your account tax-free for out-of-pocket health care expenses. You can also:

  • Pay your Medicare premiums, deductibles, copays and coinsurances
  • Pay your share of retiree medical insurance premiums through your former employer

Tip: You can't purchase Medicare supplemental insurance or a Medigap policy with money from your HSA.

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