HSA and Medicare

(image courtesy of David Souza and www.taxbrackets.orgimage courtesy of David Souza and www.taxbrackets.org )

Today TaxMama® hears from Anne in the TaxQuips Forum who is confused. “My husband is disabled and is on Medicare. He has a supplemental policy that we are currently paying out of my HSA. It was set up through my employer for only me. I went to the IRS website to find out if that was OK and came away more confused than before! (Then Anne cites something from the IRS site.)  So can we pay his insurance premiums out of my HSA or not?” 

Ask TaxMama 

Hi Anne, 

HSAs and tax advantaged accounts are wonderful ways to reduce your taxes.  

Now let’s look at what’s confusing you. The information you took comes from IRS Publication 969. You didn’t copy out the entire quote – which left me utterly confused, as well. But…here is the full quote (the colors are mine): 

Items (2) and (3) can be for your spouse or a dependent meeting the requirement for that type of coverage. For item (4), if you, the account beneficiary, are not 65 or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) generally are not qualified medical expenses. 

Let’s look at how each part relates to you – follow the colors, OK? 

1)      So, you are under age 65, yes?
2)      Your spouse is not 65 or older, right?
3)      Therefore, the Medicare premiums ARE qualified medical expenses. 

In other words, if your spouse had been age 65 or older, you would not have been able to use the HSA to pay the premiums. Since he’s younger – you MAY use the HSA to pay the premiums.

And remember, you can find answers to all kinds of questions about medical deductions and credits, and other tax issues, free. Where? Where else? At www.TaxMama.com.

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