Can I pay for my son or daughter out of my health savings account? Can my spouse use my health savings account funds? Save on taxes!

By Jeffrey Brooks, CPA, CFP, MBA for Jbrooks Wealth Advisors, PC, a Professional CPA and CFP Firm jeff@jbrookswa.com 602-687-9900 x101 Please consult with your professional tax CPA regarding your specific circumstances!
Here are some recent questions I have been asked by clients about heath savings accounts.

Question 1: Can my maximum allowable contribution be funded $5,000 to my husband who has a lot of medical bills and can I fund the balance (it is$1,250 for 2012) to me because I have few medical bills?
My answer: If a husband and wife are covered jointly under a high deductible plan, they may divide the maximum contribution of $6250 for 2012 in any way that they wish. The percentage that is deposited into each account does not have to be the same. You may deposit the maximum allowable amount any way you want!

Question 2: What happens if my husband is funded $3,125 (50%) and has medical expenses of $5,000 while I have no medical expenses. Can I use my account to pay for some of his medical bills. They file a joint tax return.

My answer: Since you file a joint tax return, the IRS allows the primary account holders to use the funds in their account to pay for qualified expenses for themselves, their spouse, and anyone that they claim as a dependent when they file their taxes.

Question 3: My child has been very ill this year. He is 4 years of age. What if my child has nearly all of the medical bills? Do I need to contribute part of our family maximum amount to our child?
My answer: You would use your heath savings account to pay for his medical bills. A child under the age of 18 is not eligible to open a HSA.

Question 4: Jeff, based on your advice I have opened our heath savings account at the H.S.A. Bank. Is it too late to get reimbursed for these out of pocket payments.

My answer: Ask your heath savings account custodian to get you checks to reimburse yourself. Please make sure to reimburse yourself by 12-31 (earlier would be better). You will need to get the funds in your heath savings account to pay these bills. If you fail to get the funds in by 12-31, the unreimbursed medical expenses will probably not be deductible because your adjusted gross income is too high.

The H.S.A. bank says: “Jeff, If your client is eligible for an HSA and opens his account by 12.1.2012, he may fund the account for the entire year. He may reimburse himself, for expenses incurred throughout the year, by writing a check from the HSA.”

Question 5: In a family account do my children have a heath savings account debit card too?

The H.S.A. bank says “Customers may request a total of three debit cards for their HSA accounts. One in the primary accounta holder’s name, one in the authorized signer’s name and one duplicate card in the primary account holder’s name. A $10 fee is applicable for the duplicate card.”

You may fund the account in any manner that you choose as long as you do not exceed the yearly maximum contribution. If you know that you will need $1200 for a root canal and are able to fund the account appropriately before you incur the expense that is fine. If you do not have sufficient funds in your HSA to cover the total expense, you may reimburse yourself when the funds become available in your account. I hope this helps.

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009
Email: jeff@jbrookswa.com