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

25 Best Kirkland Products You Should Buy at Costco
Smart Buying

25 Best Kirkland Products You Should Buy at Costco

Many of warehouse club Costco's store-branded Kirkland Signature items get high marks for quality and value. Check out our picks.
July 21, 2021
Warning: You May Have to Pay Back Your Monthly Child Tax Credit Payments
Tax Breaks

Warning: You May Have to Pay Back Your Monthly Child Tax Credit Payments

Unlike stimulus checks, you might have to repay your monthly child tax credit payments if you get too much money from the IRS.
July 16, 2021
Will Monthly Child Tax Credit Payments Lower Your Tax Refund or Raise Your Tax Bill?
Tax Breaks

Will Monthly Child Tax Credit Payments Lower Your Tax Refund or Raise Your Tax Bill?

Everyone loves receiving large sums of money from Uncle Sam. But people who take advance child tax payments may take a hit on next year's tax refund.
July 31, 2021

Recommended

How Much Umbrella Insurance Do I Need?
umbrella insurance

How Much Umbrella Insurance Do I Need?

Having too much liability insurance is better than having too little. Use our calculator to determine how much umbrella coverage is right for you.
August 3, 2021
How Patients with Lasting Symptoms of COVID Can Apply for Disability
Financial Planning

How Patients with Lasting Symptoms of COVID Can Apply for Disability

Those who can no longer work because of COVID-19 may qualify for these benefits but the approval process can be a difficult road.
July 30, 2021
Exercise Saves Seniors Money on Health Care
Healthy Living on a Budget

Exercise Saves Seniors Money on Health Care

Adults who increase their physical activity pay hundreds less per year for health care, a new study shows.
July 29, 2021
When It’s Time to Drop Your Parents’ Health Insurance.
Starting Out: New Grads and Young Professionals

When It’s Time to Drop Your Parents’ Health Insurance.

Thanks to the Affordable Care Act, the uninsured rate for twenty-somethings has plummeted.
July 29, 2021