I am shopping for LTC for my husband and myself. We are both 51 and in excellent health. We have a high deductible health insurance plan with a HSA. One of the reasons that we opted for the high deductible plan was the ability to pay LTC premiums from the HSA. My question is about payment from the HSA. I know that we can pay these premiums, but I can't seem to find out if there is a limit on the amount. I know that I can deduct on Schedule A of my tax return based on a sliding graph of our age. IRS Form 502 confirms that the HSA can be used. But it doesn't say if there is a limit from the HSA. Does anyone have any experience with the HSA payment option? I have asked the two agents competing for our business and they don't seem to have an answer. Where could I go to get any answer?

Hi Jocelyn,
You're correct. Money from a HSA can be used to pay for LTC premiums.
The amount is set by the feds each year and for 2010, the allowable amount of your deduction, at ages 51-60 is $1,230 each.

Arthur

$1230 is the allowable deduction at that age, but the amount of premium you can pay out of your HSA account, I believe, is a different set of numbers. See below:

Pay for long-term care insurance with pre-tax dollars. Long-term care premiums can be paid for from your HSA, up to $260 for those under age 40, $490 if you're between 41 and 50 years, and up to $2,600 if you're 61 years or older.

You should be able to contribute up to $6150 as a couple to the HSA...which is where the tax break comes from.....not from paying LTC premiums out of it....but it is a nice combination (HSA/LTC)

I am not a tax advisor, but this is what I have on file here. I sell a lot of HSA and LTC plans for the reasons listed above.

Yankee/others,
Look Out! - Another rookie question is ahead:

Is "setting up" an HSA to pay for the LTCi premiums fairly simple? Is an HSA something that a person (the client) needs to actively manage - does it need to be a fairly hands-on process? In other words " a hassle"?

Are the advantages generally greater than any downside for most folks?

Your comments and help are GREATLY appreciated ~ Mike

Yankee, that is incorrect.
The amount that can be paid from the HSA is limited. It is the same amount that is allowable as a deduction.

Arthur is correct.

Thank you Scott,
That's the nicest thing you ever said to me.
Arthur

I'm not such a meanie after all.

Oooops, my bad. However, in hind site, it may have been worth it for just getting you and Arthur to finally agree on something. I pulled that info off a web page labeled "HSA for America" and 2010 taxes, but in retrospect I believe these were the numbers from tax years prior and the site simply did not keep up with the latest amounts that do slide every year. I thought the numbers sounded odd when I read them.

How do you go about setting up a HSA?

http://www.treasury.gov/resource-center ... ounts.aspx

Arthur

You can't just go set up an HSA, and start paying LTC premiums from it. You can only set up an HSA if you also have an HSA-qualified high-deductible health insurance plan in place, as well. Your health insurance carrier can tell you if your plan is eligible or not. Go way back to Jocelyn's original question - they have the HSAs with the high-deductible plan already.