Posts Tagged: Taxes

Before 2013: Squeeze Extra Dollars Out of Your Health Benefits

Before the new year rolls around, putting some attention towards your health benefits can save you a lot of money. Quick! You have limited time to make the most out of your health plan for 2012, and then to get ready for 2013.

Spend down your FSA or HRA 

If you have a Flexible Spending Account or Health Reimbursement Account, check on the date it rolls over (for most of them, it’s January). You’ll lose the funds if you don’t spend them in time. Some employers offer a grace period until March 15th, but after that date, the money disappears. See what expenses can be counted.

Don’t confuse your HSA. These funds stay with you year after year!

Take advantage of your deductible

Most plan deductibles also roll over at the end of the year. If you have already met your deductible, think about whether there are any other services or procedures you need to do soon. Scheduling them before the year ends might save you from having to pay completely out of pocket in the new year.

Fund your HSA

If you have an HSA, you already know that the money that goes into it is free from taxes. Did you also know that you can keep depositing up until April 15th and your contributions will count towards your 2012 income? That means you can add more funds if you didn’t deposit enough this year or aim for the maximum contribution to get the most tax savings.

Review next year’s plan

It’s time to look at what’s new for your health plan (or all the important details if you switched plans!). The top benefits to focus on? The deductibles (individual and family, as well as in-network and out-of-network), any changes to the drug formulary, and any changes to the provider networks. These last two rule changes often surprise consumers who think their plan will be the same as it was last year.


Six HSA Tips for Beginners

This post originally appeared on 

High Deductible Health Plans paired with Health Savings Accounts (HSAs) are one of the fastest growing types of plans.

Just opening an HSA or still trying to figure out how yours works? Many people find the idea of managing not just a health plan, but now a health plan with a linked savings account a little more daunting. How much should you save? What can you spend the money on?

An HSA doesn’t have to complicate life. If you can get behind a few simple tips, you could be on your way to big savings.

WHEN: Open your HSA right away.

Don’t wait until you have medical expenses. Any expenses that you incurred before you opened the account won’t qualify for reimbursement.

HOW MUCH: Max it out first.

In general, you can take advantage of the full tax benefits of and HSA by contributing the maximum allowed—within reason of your budget of course. HSAs have the best tax benefits compared to IRAs or 401ks. You never pay taxes for contributions, interest, or distributions, so put the maximum contribution in your HSA first. The exception is if your employer matches 401k contributions—then, it’s best to put your money in the 401k up to the matched amount.

WHO: Spend on you, your spouse, your dependents.

If you have family health insurance, you can pay for your spouse’s medical expenses with your HSA even if your spouse doesn’t share the HSA.

WHAT: Get your medical supplies.

Check out what purchases you already make that qualify as HSA expenses. You can use your HSA on items such as bandages, crutches, contacts and contact solution, or breast pumps and lactation supplies.

WHAT: Pay for premiums.

In general, you can’t use HSA funds on health insurance premiums but there are some exceptions:

  • COBRA benefits
  • Medicare premiums
  • Insurance premiums after age 65
  • Long-term care insurance.

WHAT: Finally, don’t spend it at all.

Instead, pay your medical bills with non-HSA money. Sounds counter-intuitive, right? Didn’t you save that money just so you could use it on health care? While this is the purpose of an HSA, you also have the option to just let the money grow. HSA funds grow tax-deferred, so you won’t pay any tax ever unless you use the funds to pay for non-medical expenses (at least until age 65).


Last Minute Tax Tips

It’s almost April 17th. Yes, the IRS gave us all an extra two days for the 2012 tax filing deadline. Don’t forget that Simplee’s here to help you with your taxes!

If you still haven’t filed, and need some help figuring out your medical deductions, Simplee has you covered. Here’s what you can do in:

Less than 30 seconds – Log in to your Simplee account for a quick look at your medical expenses for 2011. The dashboard makes it easy to bring up claims only for the last year.  If you have dependents, you can also add in their medical expenses. Keep this figure on hand—you’ll need it soon.

Less than 1 minute – Pull out your 1099-SA. If you have an HSA, this will have been mailed to you by the HSA administrator. Use it to complete Form 8889.

Less than 2 minutes – Once you have your Adjusted Gross Income figured out, take 7.5% of it and compare this to the medical expenses from your Simplee account. If your expenses exceed 7.5% of your income, congrats! You can itemize your expenses for a bigger deduction. If not, you’re done—there’s nothing more you need to do with your medical expenditures for this tax year.

If the numbers are close, keep reading—you still might qualify for a deduction:

Less than 10 minutes (if you’re organized) – Gather up any other Qualified Medical Expenses which might not be in your Simplee account. This could include anything from premiums to travel expenses for medical appointments, or from acupuncture to improvements to your home for medical reasons. The IRS has a complete list. Make sure you have receipts or some other kind of record for each.

??? minutes – File those taxes! If you are itemizing, you need to use Form 1040 (not 1040A or 1040EZ).  If your expenses are not high enough to itemize, then the form doesn’t matter, unless of course, you’re itemizing for other reasons. You can deduct the amount of medical expenses that exceeds 7.5% of your Adjusted Gross Income. For example, if your income was $60,000, then 7.5% is $4,500. If you spent $5,000 on medical expenses, you can only deduct $500, the amount that exceeds $4,500.

For more details, see Taxes & Medical Expenses: What You Need to Know Before You Begin.


Taxes and Medical Expenses: What you Need to Know Before You Begin

You know that you can claim some tax breaks on your health care spending.  And that HSAs and FSAs are supposed to be a great tax-free ways to save for medical costs.

But now that it’s time to file your taxes, where do you start? And what do you need to prepare to be ready to file?

Let’s boil it down to the essentials here.

There are two main places in federal income taxes where you need to worry about medical expenses: your itemized deductions and your HSA.  If you have an FSA or HRA, don’t worry. There’s nothing additional you need to do with these accounts for your income taxes.

For Itemized Deductions

 Decide if you’re going to itemize. When you decide to itemize your taxes, you’re choosing to claim all the deductions that you qualify for, item by item, instead of taking the standard deduction. The standard deduction is the same for everyone of each filing status (single, married, etc), so you’ll save more money by itemizing if your own deductions exceed the standard deduction.

When it comes to health care expenses, you need to have spent a lot on Qualified Medical Expenses to be eligible to itemize. What is a lot? The IRS says 7.5% of your Adjusted Gross Income (AGI). If you didn’t spend this much in 2011, don’t bother itemizing health expenses. You can count spending for any of your dependents or your spouse. Any spending that exceeds 7.5% is deductible.

Just about anything related to diagnosing and treating injury or disease counts as a Qualified Medical Expense. For a complete list:

To itemize, you’ll need Form 1040. You cannot itemize with the 1040EZ or 1040A.

For HSAs

 Look for your 1099-SA in the mail. This form will be sent by your HSA administer and will show both how much was contributed to the account and how much was withdrawn (distributed). HSAs are not subject to the same 7.5% of AGI as are deductions. Use your 1099-SA to complete Form 8889—the form just for reporting HSA contributions and distributions.

If you already paid a large chunk of money on medical expenses in 2011, but didn’t contribute as much to your HSA to match, there’s a way to still get that money counted as a tax-free HSA contribution. In fact, up until April 15th, your HSA contributions will still be considered a part of 2011. And as long as the cash amount of your contributions for the year matches your expenses for the year, they’ll count.

To take advantage of this, first find out how much you contributed to your HSA in 2011 (log in to your Simplee account to see). The annual maximum contribution is $3,050 for a single person, $6,150 for a family. If you’re below your limit, determine much you already spent in out-of-pocket medical costs (also on Simplee!). Deposit as much of this as you can, up until the limit, into your HSA. If you can’t afford to keep that much in your HSA at the moment, no problem—you can now withdraw it as cash, but still get the HSA deduction on the amount.

So for example: Let’s say you’re single and contributed $2,000 to your HSA last year. And you had $800 in out-of-pocket medical expenses, which you already paid. You still have a lot of room before you reach your limit of $3,050—almost $1,000. You can deposit $800 in your HSA, and then immediately distribute it. You’ll get the full deduction on that $800 through your medical expenses, as well as the full amount counted towards the HSA tax benefit.

And finally, keep receipts and records. You don’t have to submit these with your taxes—all you need is just one number: how much your Qualified Medical Expenses turned out to be. However, you should keep the proof on hand in case you are audited.

These rules will apply to most people. However, if you’re self-employed, your situation might be different. Visit or talk to a tax advisor to get the best advice.


Why Should I Track My Medical Bills?

Let’s say you decide to rent an apartment. You don’t know all the details in the lease and the landlord calls you on a regular basis to say there’s another expense…Would you please send a check (for some amount that sounds random)? Something just doesn’t feel right here…

Yet many of us are like that with our health care. It’s understandable—who can really decipher all the documents and sort through all the mail?

But it’s important to understand the basics of your health plan and to track your bills for several reasons. A little time could save you money later on. Here’s why.

Billing mistakes happen 

Anywhere from 30 to 40% of all medical bills contain errors of some type, according to health finance expert Stephen Parente at the University of Minnesota. Some claim the figure is even higher. These errors can include things like upcoding (attaching a more expensive billing code to the service you received so that you are charged for a more), charging more than once for the same service, or breaking a service down into separate parts and charging for each of those (like the gloves and tools used during a surgery). There are many tips for spotting these errors, but the place to start is tracking and reviewing each bill as it comes.  Check your claims detail in Simplee to see your provider charges explained in simple language.

Multiple bills

Medical bills are hardly straight-forward, so you can end up paying more than need to. It’s common to receive multiple pieces of mail related to a single medical service. The first is often an Explanation of Benefits (EoB). You know, the letter that looks like a bill but says on the top “This is not a bill.” An EoB is just a notification from your health plan that they received a bill from your doctor and explains what they plan to pay. Following an EoB, you can expect a bill from your doctor or provider. Sometimes, multiple bills are sent for the same item, so it can be confusing to determine whether you’ve paid one or not. A good way to track these is by the date of service. You may even want to keep track of the date of your medical appointments so that you can easily match these up.  And of course, you can also track things in the Simplee dashboard, which combines information from your provider and your insurance company in one place.

Tax breaks

 If your annual medical expenses exceed 7.5% of your adjusted gross income, you can deduct them from your taxes. This includes pretty much anything that is medically necessary, such as: insurance premiums (though only a portion), co-pays and coinsurance, prescription drugs, home care, acupuncture, mental health, dental treatment, glasses, and medical supplies.

Late fees

This is an obvious one. Late payments come with a late fee, so don’t put yourself there if you don’t need to. If you are unable to pay a bill right away, contact the hospital or provider. Many offer payment plans or will negotiate a discount.

Understand your spending

Finally, it’s good to know when you meet your plan’s deductible or out-of-pocket maximum. This information can help you see when you can expect your plan to pay, when you’re free from your coinsurance (whew!), how much you are spending, and how well your health plan is working for you.  Here is another area where Simplee is a big help– your deductible is tracked automatically, and you’ll get an email when it is met.

Tracking medical bills isn’t fun, but Simplee makes it a lot easier.  If you’ve been avoiding tracking your expenses, now is the time to jump in!


My Year-Round Tax Assistant (at least for Health Care Expenses)

It’s tax time and so many people I know are sifting through receipts paper-clipped together and envelopes of medical bills to try to tally up their tax-deductible medical expenses over the last year. I remember these days well.

This year, I was amazed at how easy it was to see how much I’d spent on health care over the last year. Almost too easy. On my Simplee home page, “Your Spending” jumps out in big bold numbers that are hard to miss. And then, I can drill down into the date of each appointment, the exact service that was billed, how much my insurance paid, and more.

It’s as if someone was collecting all my medical bills throughout the year and organizing, filing, and summarizing them all for me. And they probably won’t mix up or triple count those multiple bills I got for the same doctor’s visit back in… July?

Simplee doesn’t contain everything for your taxes, only the expenses for medical care. Expenditures such as transportation costs, premiums, and long-term care services are all tax-deductible, but Simplee only tracks insurance related expenses. But this is a huge start to just giving me a sense of how much I’ve spent and whether it’s worth claiming the deduction (Your expenses must be more than 7.5% of your adjusted gross income or you must file schedule A to deduct medical expenses).

So next April, I look forward to having Simplee as a resource to understand my health care spending and at least ease some of that pain before April 15th