Stock Up Now on Over-the-Counter Drugs. On January 1, 2011, the new health care law prohibits you from using your HSA for over-the-counter drugs without a prescription. So now is the time to stock up on aspirin, cold medicine, throat lozenges, and other over-the-counter drugs.
Know the Rules for After January 1. You can still buy over-the-counter drugs with your HSA after January 1 if you get a doctor’s prescription for the drug (you don’t need a prescription for insulin). You can also continue to use your HSA for non-drug over-the-counter items like contact lenses cleaner or bandages without a prescription.
Take a Non-Eligible Distribution Now (If Absolutely Necessary)- 10% Penalty Increases to 20% in 2010. Although we would never recommend using your HSA for anything other than eligible medical expenses or general retirement at age 65, sometimes tough financial choices are necessary. The penalty for non-eligible distributions from you HSA is increasing to 20% from 10% starting on January 1, 2011.
Save 2010 Medical Receipts. One of the great appeals of HSAs is you do not need to rush to spend any remaining funds in your HSAs or even to rush to reimburse yourself for any medical receipts you paid with non-HSA funds. There is no deadline. However, you are required to save a copy of your medical receipts for record keeping purposes. Year-end is a good time to start pulling that file together.
Change 2011 Automatic Payment Amounts. Now is a good time to plan ahead for how much to contribute to your HSA in 2011. HSAs remain about the best tax deal available. Take full advantage of your HSA and contribute the maximum ($3,050 for singles and $6,150 for families – plus $1,000 if over age 55 for 2011). Spreading this amount over all of 2011 makes it easier to do this. Change your payroll deferral election at work to accomplish this.
General Benefits Questions contact Safe Harbor Benefits at (817) 226-3372.