HSAs and LTC Premiums

[Mr_Ed]

Really??? Can you show where you see that? Honestly, that is not how I understand it.

Publication 502 defines what a qualified medical expense is. Long term care insurance premiums are considered a qualified medical expense, but only up to a certain amount of the premium depending upon the age of the policyholder.

Here's the link:

Publication 502 (2010), Medical and Dental Expenses



nadm

 

[yankee466]

I think both nadm and I explained this is how it worked from the initial post. You came to this forum looking for people who supposedly knew what they are doing.....and now you question the answers? If nadm says it is so.....and Arthur doesn't jump and and say "Scott...YOU'RE WRONG!!!!"....you can likely take it to the bank.



Kidding of course....but hopefully this all helped. Sometimes semantics gets in the way too.

 

[Mr_Ed]

Here in CA the amount of money that could be put into an HSA account is not based on age, but based on an individual verses family plan. For individuals the maximum is $3,050 and for families is $6,150. If a couple purchases LTC and they fund their HSA account they can use up to $6,150 pre-tax dollars to pay for their premiums. They do need to have an HSA qualified Health insurance plan to open an HSA savings account.

Again, it doesn't matter how much is deposited into the HSA or how much is in the HSA. What determines how much can be withdrawn from the HSA to pay the LTCi premium is the age of the policyholder.

nadm

 

[scagnt83]

So does paying LTCI premiums from a HSA affect the deductibility of them?

 

[Mr_Ed]

So does paying LTCI premiums from a HSA affect the deductibility of them?

How can you deduct an expense for which you did not already pay tax?

 

[scagnt83]

How can you deduct an expense for which you did not already pay tax?

I touched on that earlier; but our tax code is convoluted and full of loopholes.

Is their any part of the tax code that specifically prohibits this?
If not then it technically could be done.

 

[LFC]

Really??? Can you show where you see that? Honestly, that is not how I understand it.

I agree, I have sold plenty of LTC plans and I personally have an HSA plan. It is not based on age in California. You can pay your premiums with HSA account dollars which are funds that are in a tax deferred account.

 

[Mr_Ed]

I agree, I have sold plenty of LTC plans and I personally have an HSA plan. It is not based on age in California. You can pay your premiums with HSA account dollars which are funds that are in a tax deferred account.

The amount of money you can deposit into an HSA is not based upon age.

The amount of money that you can withdraw from the HSA to pay towards your LTCi premium is based upon the age you become in that tax year.

It's as clear as day in the tax code. Read the link I posted earlier. Read every tax guide that every LTC insurer publishes. Read the CLTC guidelines on this topic. They all say the same thing.

I can understand why 3 of you don't want to believe me... because if you get audited you'll have to pay the penalties for making too large of a withdrawal from your HSA for a nonqualified medical expense... plus, you've been giving wrong advice to your clients.

Since you won't believe me and you won't believe (or can't understand) the link to the IRS publication that explains it, call the LTC insurer that you place most of your business with (NOT THE MGA NOR THE FMO, but the actual insurance company) and talk to someone in "advanced markets" and ask them. They will tell you that the amount that you can withdraw from the HSA each year is based upon your age in that calendar year.

All I do is LTCi. I've been doing nothing but LTCi for 15 years. I don't do anything else. I know what I'm talking about. But, you don't have to believe me, call the insurance company you have your LTCi with.


nadm

 

[sdmillar]

NADM,

I'm sorry if I am just not that smart, but the link that you referred to was the IRS regulations on all medical expenses that qualified toward figuring your 7.5% of AGI as to whether you could write off your medical expenses for the year.

I see the chart as it relates to how much one can include in their qualified medical expenses as it pertains to figuring their 7.5% of AGI and I agree that someone that does not have a HSA that pays their premiums from their normal savings would need to look at that chart to determine how much would go toward the qualified medical expenses as it pertains to whether they could write those premiums off.

I do not however see anywhere on that IRS publication that pertains to how much can be paid for out of your own HSA savings account. I certainly respect your 15 years of experience and I am not one to argue, I am just looking for something in writing that spells out limits in dollars, either based on age or otherwise, that one can take from their HSA and pay their LTCi premiums.

Your suggestion to call the carrier directly is a good one. I will be doing that this morning, asking them for a source as well. When I get such a source I will post it here.

Thank you again

 

[Mr_Ed]

NADM,

I'm sorry if I am just not that smart, but the link that you referred to was the IRS regulations on all medical expenses that qualified toward figuring your 7.5% of AGI as to whether you could write off your medical expenses for the year.

I see the chart as it relates to how much one can include in their qualified medical expenses as it pertains to figuring their 7.5% of AGI and I agree that someone that does not have a HSA that pays their premiums from their normal savings would need to look at that chart to determine how much would go toward the qualified medical expenses as it pertains to whether they could write those premiums off.

I do not however see anywhere on that IRS publication that pertains to how much can be paid for out of your own HSA savings account. I certainly respect your 15 years of experience and I am not one to argue, I am just looking for something in writing that spells out limits in dollars, either based on age or otherwise, that one can take from their HSA and pay their LTCi premiums.

Your suggestion to call the carrier directly is a good one. I will be doing that this morning, asking them for a source as well. When I get such a source I will post it here.

Thank you again

The link that I posted is the IRS publication that defines what is considered to be a "qualified medical expense".

The IRS link that explains "Health Savings Accounts" (pub. 969)

Publication 969 (2010), Health Savings Accounts and Other Tax-Favored Health Plans


says that a health savings account can be used to pay for:

"Qualified medical expenses. Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. These are explained in Publication 502, Medical and Dental Expenses."

I posted the link to Publication 502:

Publication 502 (2010), Medical and Dental Expenses

Publication 502 specifically lists all the qualified medical expenses.

A qualified medical expense that can be deducted on Schedule A is the same "qualified medical expense" that can be paid from an HSA.

The entire LTCi premium is NOT a qualified medical expense.

The "age eligible" amount of the LTCi premium IS a qualified medical expense.

Whoever told you that the entire LTCI premium can be paid from an HSA is WRONG. Only the "age eligible" premium can be paid for from the HSA>

nadm