Withdrawing Money from a Health Savings Account
Self employed individuals struggling to pay for their own health care insurance may get some relief in the form of a health savings account. If you opt into a high deductible health insurance policy, not only will your monthly premiums be lower, you can also open a personal savings account specifically for the use of paying for your medical expenses. A health savings account works directly with a high deductible health insurance plan and provides a tax-free way to offset your routine medical expenses.
Since you are the manager of your own health savings account, withdrawing money is easy. You directly access your own funds to pay off qualifying medical expenses such as a deductible, routine medical check ups and even over the counter medical expenses. It is up to you to determine what the money should be withdrawn for, but it is also up to you to provide the IRS with accurate documentation of your legitimate medical expenses. If you end up deducting your money and spend it on unqualified medical expenses, you will be fined a 10% penalty on that portion used and the money will become subject to income tax.
You are responsible for all transactions to and from your health savings account. It is crucial that you document everything thoroughly to be able to take advantage of the benefits a health savings account has to offer. Not all health savings accounts provide separate checks or ATMs to be used specifically for medical expenses. If you need to pay for a medical expense, just pay for it out of pocket then reimburse yourself via a withdrawal from your health savings account.
Health savings accounts are a great way to offset the cost of rising medical expenses while getting the freedom you need to make your own choices about health care. Withdrawing the money is easy – just remember to back up every transaction with paperwork and receipts.