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August
31, 2005
Over
the Counter Supplements
When
the government tells you that you qualify for a tax
deduction, it is my belief that you should take it.
Don't claim more than you deserve, but take everything
you've got coming. There is no honor in paying
more taxes than you really owe. A couple months
ago I wrote about using your HSA
to pay for dental expenses. This
month, I'm going to share some ideas on some other
tax deductions that you don't want to miss out on
if you own an HSA.
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Qualified
Expenses
A partial
list of qualified medical expenses is provided in IRS
Publication 502. There is no such thing as
a definitive list of "qualified medical expenses",
though there have been thousands of cases involving the many
nuances of what constitutes "medical care" for purposes
of section 213(d) of the Internal Revenue Code.
According
to the U.S. Treasury Department, virtually any expense that
is primarily for the prevention or alleviation
of a physical or mental defect or illness can be considered
a qualified medical expense. Any qualified medical expense
can be paid for tax-free using funds from your HSA.
Over-the-counter
Medication
Most bathroom
cabinets contain a bottle of Advil or aspirin, perhaps some
antacids, cold and flu medications, and other over-the-counter
medication. People who own Health Savings Accounts can pay for sleep aids,
motion sickness pills, throat lozenges, and most other over-the-counter
medicines tax-free from their HSA.
One of
the things that we keep around is echinacea and astragalus,
two herbal extracts that are immune stimulants and come in
children's flavors. Herbal medicines can be paid for
from your HSA only if prescribed by your medical practitioner.
Fortunately, HSA legislation puts very few restrictions on
the type of medical care you use, giving you, the consumer,
the power to decide how to manage your health.
Nutritional
supplements
If nutritional
supplements have been recommended by your medical practitioner,
to treat or prevent a specific condition, then you may be
able to use your HSA to pay for it. (You may not use
your HSA to pay for a vitamin taken for general health.)
As one
example, there is a tremendous amount of evidence to support
the use of fish oil to lower the risk of cardiovascular disease.
In my opinion*, it is one of the most important nutritional
supplements for most people to take. In 2002, the conservative
American Heart Association even issued a scientific
statement saying:
Omega-3
fatty acids have been shown in epidemiological and clinical
trials to reduce the incidence of CVD. Large-scale
epidemiological studies suggest that individuals at risk
for CHD benefit from the consumption of plant- and marine-derived
omega-3 fatty acids, although the ideal intakes presently
are unclear. Evidence from prospective secondary prevention
studies suggests that EPA+DHA supplementation ranging from
0.5 to 1.8 g/d (either as fatty fish or supplements) significantly
reduces subsequent cardiac and all-cause mortality.
My healthcare
provider recommends that I take fish oil supplements to reduce
my risk of cardiovascular disease, so I've decided to pay
for it from my HSA. I'm probably spending $5 or $6 a
week on this supplement, the equivalent of another $300 that
I don't have to pay income taxes on. Not only am I saving
money, but I'm also reducing the chance that I may one day
be hitting Medicare up for a bypass operation. It's
win-win for everybody.
By the
way, if you (and perhaps your doctor) decide you should be
taking fish oil, I recommend using a high-quality brand.
Fish oil is very fragile, and goes bad very easily.
I've found inexpensive low-quality brands cause one to burp
up fish taste, not a pleasant side effect.
Record
keeping
To enable
you to pay for small expenses like over-the-counter medications
directly from your HSA, many HSA
Administrators offer a debit card. You may
also reimburse yourself from your account if you paid with
cash or a credit card.
Those
of you who read last month's email know that I've decided
to reimburse myself from my HSA at a later date, giving the
account some time to grow, tax-deferred. So I'm throwing
all my medical receipts into a file labeled "un-reimbursed
medical expenses", and whenever I am ready, I will reimburse
myself from my HSA.
Attention:
This is not tax advice.
Remember,
I'm not an accountant, and HSA for America is not engaged
in rendering tax advice. I've given you some examples
of how you can pay for over-the-counter medications from your
HSA, as well as for nutritional supplements under certain
conditions. If you're uncertain as to whether an expense
is primarily for the treatment or prevention of a medical
condition, then talk to your own accountant or financial advisor.
My objective
in this newsletter is to help you take maximum advantage of
your health savings account. Many accountants are still
not yet familiar with all the money-saving benefits of Health Savings Accounts,
so feel free to invite your own accountant to subscribe at
http://www.health--savings--accounts.com/newsletter.htm.
If you
still don't have an HSA, please give us a call at 866-749- 2039
and we'll be happy to give you some options to consider.
To your
health and wealth,
Wiley
Long
President - HSA
for America
P.S. Next month I'll discuss the secrets to avoiding
health insurance rate increases.
*P.S.S.
Everybody has opinions, and I'm certainly not giving medical
advice. But last week, four years after deciding to
return to school for an advanced degree, I successfully defended
my master's thesis in human nutrition at Colorado State University.
That said, it's still just my opinion that most people would
benefit by taking fish oil, but at least it's an educated
opinion.
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