long term care

Using a Health Savings Account to Pay Long-Term-Care Premiums

You can tap an HSA to pay the premiums for a long-term-care insurance policy, but the amount you can withdraw tax-free depends on your age.

Question: Can I take out money tax-free from my health savings account to pay my long-term-care insurance premiums? If so, how much is tax-free?

Answer: Yes, you can use money from your HSA tax-free to pay your long-term-care insurance premiums, with the maximum annual tax-free amount based on your age.

If you’re 40 or younger, you can withdraw up to $420 tax-free from an HSA in 2019 to pay the premiums; if you’re age 41 to 50, you can take out $790; if you’re age 51 to 60, $1,580; if you’re age 61 to 70, $4,220; and if you’re age 71 or older, $5,270. If you and your spouse both have long-term-care policies, you can each use money tax-free from your HSA to pay premiums, up to the aged-based maximum for each of you (based on your ages by the end of the year). These limits increase slightly each year for inflation.

To qualify, the long-term-care policy must cover only long-term-care services. And it must pay out if you need help with at least two activities of daily living or have cognitive impairment. Most traditional long-term-care insurance policies qualify. If you’re not sure, ask your insurer if your policy is “tax-qualified.”

Most Popular

Yes, You Can Collect Social Security from an Ex-Spouse: Here’s How
social security

Yes, You Can Collect Social Security from an Ex-Spouse: Here’s How

It’s always smart to maximize your Social Security benefits, and if you are divorced, one way to do that might be to take them based on your ex’s earn…
May 13, 2021
Refunds for $10,200 Unemployment Tax Break to Begin This Week
Coronavirus and Your Money

Refunds for $10,200 Unemployment Tax Break to Begin This Week

The IRS will start issuing automatic refunds in mid-May to people eligible for the unemployment benefit tax exemption.
May 14, 2021
18 Worst Things to Buy at Dollar Stores
spending

18 Worst Things to Buy at Dollar Stores

These discount retailers stock plenty of bargains, but some of the merchandise isn’t worth the buck.
May 14, 2021

Recommended

The Odds Say Long-Term Care May Be in Your Future: Are You Prepared?
long term care insurance

The Odds Say Long-Term Care May Be in Your Future: Are You Prepared?

There are options other than long-term care insurance, so it’s a good idea to examine your options sooner rather than later.
May 11, 2021
Annuities: How They Could Work for You
Financial Planning

Annuities: How They Could Work for You

No doubt, investing in annuities can be a tough call for the active investor. But there comes a time when relinquishing some control in exchange for r…
May 6, 2021
Umbrella Insurance – Do I Need It?
insurance

Umbrella Insurance – Do I Need It?

You might think your home and auto insurance offer more than enough coverage, but if you’re wrong, one very bad day could wipe out your wealth. That’s…
May 5, 2021
Stimulus Plan Has Health Insurance Benefits, Too
Coronavirus and Your Money

Stimulus Plan Has Health Insurance Benefits, Too

The plan’s health care provisions could deliver big savings for early retirees and laid-off workers.
April 29, 2021