Can I Pay for Long-Term Care with HSA Funds?

We are proponents of Health Savings Accounts (HSAs) and have continued to discuss their benefits over time. HSAs can be a great way to manage healthcare costs, gain a tax deduction, and save future dollars. These tax-free accounts can also help fund long-term care (LTC). Expenses related to LTC services should be reviewed by a tax professional to determine what is HSA eligible. Here are a few guidelines to follow:

1. HSA funds can be used to pay LTC insurance premiums but the amount you can withdraw tax-free depends on your age. For instance, if you’re 40 years old or younger, the maximum premium payment allowable is $410. If you’re 70 years old or older, it’s $5,110.

2. If you are not funding LTC with insurance, HSA funds can still be utilized. Maintenance or custodial care expenses that assist a person with activities of daily living may qualify.

3. LTC services don’t always have to be provided in an institutional setting. Private home-care services can be covered by HSA funds as they are considered health-maintenance related expenses.

4. LTC services that are HSA eligible must meet a “plan of care” provided by a licensed health-care practitioner. The written “plan of care” is defined as any physician, registered professional nurse, licensed social worker or other individuals who meet such requirements as may be prescribed by the secretary of the Treasury.

5. Document all LTC expenses paid with HSA dollars for future IRS inquiries.

Utilizing HSAs is one of the many ways that Soundmark helps clients maximize savings options and manage taxes as part of our life and retirement planning process. Let us know how we can help you and your family plan for the future.

Celebrating a Decade of Success

Soundmark Wealth Management reaches a significant milestone this year, celebrating their 10-year anniversary of working together with their clients to achieve financial and lifetime goals. The foundation of the firm, however, had its beginning eight years prior to that, in 2000, when John Buller, Todd Flynn, and Bill Schultheis connected, collaborated, and concluded there had … Continued

Washington Launches a New College Investment Program – What You Need to Know.

Washington state recently launched the Dream Ahead College Investment Plan as an addition to the Guaranteed Education Tuition (GET) plan. PROGRAM FEATURES While the GET program is a prepaid tuition plan, the Dream Ahead plan has multiple investment choices with varying degrees of customization. The risk and returns of the program are tied to the … Continued

What You Need to Know About Your Social Security Benefits

Not only do we discuss Social Security with our clients at Soundmark (apparently only 13% of older adults have discussed their Social Security benefit with their advisor), we go a step further to educate our clients on the pros and cons of delaying benefits and the impact it has on their overall plan. When the … Continued

Over 50? Here’s What You Need to Know About Life Insurance

KEY TAKEAWAYS: Life insurance needs change overtime, regular review is important to successful financial planning. Answering difficult questions about mortality and end of life stages can be helpful for your family and with securing your estate. Not all life insurance policies are the same, finding the one that fits your individual needs is key! You … Continued

Celebrate National Social Security Month

Did you know you can estimate your future Social Security benefits or find out if you qualify for benefits online? The Social Security Administration online services have expanded to offer several ways to help you navigate the complex system. They also offer a suite of business services to help companies report employee wages and verify … Continued

Don’t Forget About Washington State’s Estate Tax

KEY TAKEAWAYS: Though the federal estate tax exemption has increased dramatically, Washington state’s estate tax exclusion is significantly lower. Washington state taxes estates valued at more than $2.193 million—don’t take your eye off the ball! Even if a Washington married couple’s joint estate value is under the combined individual limit of $4.386 million, they could … Continued

Accentuating Portfolios Beyond Target Date Funds

For younger, less experienced investors, a Target Date Fund can be an easy way to get started in investing. For more accomplished investors, we generally don’t recommend Target Date funds for the following three main reasons. 1. Target Date Funds do not consider your other investment assets or income sources, potentially taking on significantly more … Continued

The Data Doesn’t Lie – The Reason We Diversify

In 1976, The Vanguard Group, led by its founder John Bogle, created the first retail index fund. Although slow to capture the attention of investors, this fund, initially labeled the S&P 500 Index Investment Trust, has grown to become the largest mutual fund in the industry today. With a focus on simplicity, in 1992 Vanguard … Continued

Microsoft’s After-Tax Savings Benefit … just got better!

Last year I wrote an article on one of the best benefits for Microsoft Employees – that benefit just got even better! I’ve highlighted three benefits that I believe all Microsoft employees should take advantage of.   401(k) Increase: While previously, a Microsoft employee could contribute $18,000 to their 401(k) in 2017, they can now contribute … Continued