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While the latest health savings account industry research clearly shows a strong trend of more and more HSA accountholders leveraging their HSA as a long-term investment vehicle and contributing more than they’re withdrawing, it’s still important for all HSA accountholders to understand how the landscape of health savings accounts has evolved over this past year—especially as it pertains to the expansion of HSA-eligible expenses.
From the CARES Act being signed into law in March 2020, to IRS updates issued in March 2021, taking advantage of your tax-free HSA dollars is now even easier—whether you tap into your HSA funds now or in the future.
Whether you choose to spend or save your HSA dollars, the important thing to know is what expenses are now HSA-eligible. Because with an HSA, there’s no time limit for reimbursing yourself with your tax-free dollars for any HSA-eligible expenses you incur while your HSA is open—as long as you remember to keep good records and receipts for whenever you choose to tap into your account—simple to do with Bend’s easy electronic recordkeeping.
You can only take full advantage of your HSA by knowing all the different expenses that are now HSA-eligible. Otherwise, you may miss out on substantial tax savings, now or in the future.
For more than a year, the CARES Act has provided key expansions on how you can use your HSA throughout the coronavirus pandemic, and potentially beyond.
Here are the three main CARES Act HSA updates all HSA accountholders need to be aware of:
On March 26, 2021, the IRS issued IRS Announcement 2021-7, which further expanded HSA-eligible expenses to include personal protective equipment purchased for the primary purpose of preventing the spread of COVID-19. This includes masks, hand sanitizer, sanitizing wipes and even at-home COVID testing kits.
This HSA eligibility expansion applies to expenses not only for you as an HSA accountholder, but also for your spouse and any tax dependents, and is retroactive to January 1, 2020.
Important to note, the IRS issued another announcement in March, IRS Announcement 2021-21, which extended the contribution deadline to apply HSA funds toward 2020 to May 17, 2021. This means you still have time to take advantage of these recently added eligible HSA expansions for 2020, along with all other HSA-eligible expenses you may have incurred last year.
Along with the expanded HSA-eligible expenses in response to COVID-19, it’s also important to take the time to brush up on the many often-overlooked healthcare expenses that are also indeed HSA-eligible.
Here’s just a quick list of some of the highlights:
Check out IRS Publication 502 for a comprehensive list of HSA-eligible expenses to be sure you’re not missing out on expenses you could be taking advantage of with your tax-free HSA dollars.
Along with the expansive list of HSA-eligible expenses, it’s also worth noting that there are a variety of other healthcare costs you can receive immediate benefits for as an HSA accountholder—anything listed on the IRS’s ever-expanding preventive care list. What that means is that you bypass your deductible and the care is provided at no cost to you. Everything from asthma and diabetes, to heart disease, wellness checks and more falls under preventive care.
Taking advantage of preventive care can save you thousands of dollars a year in healthcare costs, and just like knowing what expenses are HSA-eligible, is an important factor to consider in fully leveraging the power of your HDHP/HSA pairing.
At Bend, we’re committed to keeping all our accountholders in the know and ensuring we make HSAs easy for everyone. We provide the tools, resources, education and updates you need to make the most of your HSA, regardless of your level of HSA knowledge.
We want everyone to maximize their HSA. Even if you have an HSA through another provider, you can still open an HSA with us and discover the Bend Difference.