Can I use money from my health savings account to pay for long-term-care insurance?
Yes. If you have a tax-qualified long-term-care policy (which includes most policies that pay benefits if you need help with at least two activities of daily living or have cognitive impairment), then you may be able to make a tax-free withdrawal from your health savings account to pay for a portion of your premiums. The annual limits depend on your age. In 2013, you can withdraw up to $360 from your HSA tax-free to pay premiums if you’re age 40 or younger; $680 if you’re 41 to 50; $1,360 if you’re 51 to 60; $3,640 if you’re 61 to 70; and $4,550 if you’re 71 or older.
If you don’t use HSA money for your long-term-care premiums, you may be able to count your premiums as a tax-deductible medical expense -- up to the same dollar limits by age that apply to HSA withdrawals for long-term-care costs. Medical expenses are tax-deductible if you itemize, but only after they exceed 10% of your adjusted gross income (or 7.5% if you’re 65 or older). For more information about the tax deductions for medical expenses, see IRS Publication 502 Medical and Dental Expenses (although the numbers for long-term-care premiums there are for 2012).
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For more information about HSAs, see FAQs About Health Savings Accounts. For more information about long-term-care insurance, see A New Strategy for Paying for Long-Term Care and our Long-Term Care Special Report.
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