Massage therapy has a variety of potential therapeutic benefits, including stress reduction, improved circulation, enhanced flexibility, pain relief, and enhanced immune response. But can I use my HSA for massage therapy?
Can I Use HSA For Massage Therapy?
These benefits are why doctors sometimes regard massage therapy as “medically necessary.”
If your massage therapy is medically necessary to treat a specific, diagnosed illness or injury, and not for general wellness purposes, you may be able to use the money in your health savings account (HSA) to pay for it, tax free.
However, to ensure the IRS doesn’t later question the medical necessity of your massage therapy and disallow the deduction, you should get a letter of medical necessity (LMN) from your doctor.
In the LMN, Your doctor should outline the specific medical condition being treated and how massage therapy will serve as a part of your treatment plan. You will be able to book your massage appointments using your HSA funds to cover the expense!
By using your HSA to pay for massage therapy, you’re not only investing in your health but also optimizing your financial resources.
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Understanding HSAs
HSAs allow you to set aside money before taxes for approved healthcare costs, effectively reducing taxable income, and therefore lowering your income tax liability in the year you contribute.
Health savings accounts offer a triple tax benefit: contributions are pre-tax or tax-deductible, earnings grow tax-deferred, and withdrawals for qualified medical expenses are tax-free.
HSAs can cover a wide range of medical expenses not always paid by insurance, like dental and vision care.
With an HSA, your contributions roll-over year to year, allowing you to build a nest egg for future medical expenses or retirement. Even better, your contributions are an above-the-line deduction, meaning you don’t need to itemize to benefit from the tax deduction.
The catch: there is a penalty of 20% on any withdrawals you make that are not associated with a qualified medical expense.
But once you turn 65, the 20% penalty goes away. HSA funds can then be used for any purpose without penalties. You just pay the deferred income tax on the withdrawal, just as you would with a traditional IRA.
So this makes HSAs a valuable tool for retirement savings as well.
HSA Eligibility
To be eligible to contribute to an HSA, you must be enrolled in a qualified high-deductible health plan (HDHP) and not covered by other comprehensive insurance or claimed as a dependent on someone else’s tax return.
What Can I Use My HSA For?
Qualified medical expenses are costs related to the treatment or prevention of specific health conditions.
Eligible expenses for HSA use cover a broad range, such as:
- Appointments with physicians, including any copays and deductibles
- Prescription drugs
- Dental treatments
- Eye care, encompassing glasses and contact lenses
- Chiropractic services
- Acupuncture treatments
- Transportation Expenses
- Virtually any other medical expense
See: HealthCare.gov for more information.
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Optimizing Your HSA Contributions in 2024
To fully leverage your Health Savings Account (HSA), consider these strategies:
- Max Out Your Contributions. For 2024, individuals can contribute up to $4,150, and families can contribute up to $8,300. If you’re between 55 and 65 years old you can add an extra $1,000.
- Spend HSA Funds Wisely. Use HSA funds exclusively for qualified medical expenses to avoid income taxes and a 20% penalty on withdrawals.
- Invest HSA Contributions. Consider investing your HSA funds in a self-directed account for potentially higher returns. While investing involves risk, any growth within your HSA enjoys tax-advantaged status, provided the funds remain in the account.
- Maintain Records. Keep detailed records and receipts of your medical expenses. This documentation is crucial if you’re audited.
- Seek High-Interest Accounts. Look for HSA providers offering above-average interest rates to maximize earnings on your account balance.
- HSA Rollovers. If your current HSA provider has high fees or limited investment options, consider transferring your HSA to a provider that better meets your needs.
Make a free, no-obligation appointment with your Personal Benefits Manager today.
For Further Reading: Can I Use an HSA to Pay For Counseling or Therapy? | How to Get the Most Out of Your Health Savings Account | The HSA Secure Plan: Combining the Best of Both Worlds
