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November 24, 2006
Health Savings Accounts Cover Alternative Medicine
A Health Savings Account (HSA) does not cover every type of alternative medicine. However, a person using a Health Savings Account can withdraw money from their HSA account for any type of "qualified medical expense". Qualified by whom... the IRS.
So, the IRS pretty much thinks that proper medical expenses are any types of Western medicine - pharmaceutical drugs, surgery, doctor visits, etc. However, there are many things on the list that are alternative medical options. For example, chiropractors are on the list and so is acupuncture.
With acupuncture, it must be considered medically necessary. That means that a doctor (MD or DO) must say that he thinks you should see an acupuncturist and write a prescription for it. Then you can see an acupuncturist and pay for it with the money from your HSA.
But there's one more thing. When you are using an HSA in conjunction with a high-deductible health insurance policy, you start seeing the real costs of everything you do, up until you hit that high deductible each year.
When you start seeing the real costs of Western medicine, at that point, alternative medicine might start to look really good.
Consider the following:
A routine doctor visit done before you meet your deductible may cost you about $100. That is one hundred dollars for about a seven-minute visit. (HMOs like doctors to have short visits with their patients.)
Now think about an alternative medical provider. Let's take a naturopath as an example. A naturopath may charge about $90 for your first visit. That visit will probably take about an hour and a half.
Let's look at the cost in dollars-per-minute:
- The doctor visit costs $14.28 per minute.
- The naturopath visit costs $1.00 per minute.
You might think a doctor is better qualified to understand your health problems, but do you think they are 14 times better qualified.
Health Savings Accounts will cause all of us to evaluate our options. We'll look at all the aspects of Western medicine and alternative medicine (or integrative medicine) and we'll choose the ones that make the most sense.
Health Savings Accounts will change how we think of health insurance. They are a wonderful tool that almost every American can and should benefit from. And they're available today!
See all the HSA Qualified Expenses.
Posted by Wiley Long at November 24, 2006 02:23 PM
Comments
this was helpful. i assume the IRS still considers acupuncture valid for health savings plans. have they broadened their definition since this posting? second point, will the carrier of the health insurance policy consider acupuncture and or other forms of alternative medicine legitimate medical procedures once the high deductible has been met.
thanks...
Posted by: Avi Wenger at January 10, 2008 09:57 AM
Hi Avi,
Yes, acupuncture is still a valid HSA-qualified expense. The list of valid HSA-qualifed expenses has not changed in some time. You can see a complete list here:
http://www.health--savings--accounts.com/qualified-expenses.htm
For your second question, acupuncture and other forms of alternative procedures are only covered after the deductible is met IF the health insurance plan you are on covers them. Unfortunately, most insurance plans do not cover alternative care at this time. Hopefully that will change soon. However, those expenses can still be paid tax-free from your HSA.
Posted by: Wiley Long at January 16, 2008 12:53 PM