Whats the penalty for ineligible purchases?
If you withdraw the money or spend it on unapproved medical expenses, you’ll owe all income taxes on the amount and a 10 percent penalty. What happens to unused balances at the end of the year? Any leftover money rolls over to the next year. At age 65, you can use the money for medical expenses, including Medicare premiums, or for any other expenses. Money withdrawn for nonmedical expenses, however, is taxable. Source: U.S. Treasury Department And, because the savings accounts must be coupled with a high-deductible insurance plan, you pay a lot less in medical premiums each year. The idea is to tap the health savings account for routine health expenses and deductibles, while relying on insurance for major medical bills. Today, Seattle’s Regence BlueShield will begin selling health savings account-qualified insurance plans, which by law must have deductibles of at least $1,000 for individuals and $2,000 for family coverage. Premera Blue Cross, Washington’s largest health insurer, and it
