You can take money from a health savings account to pay the premiums for a long-term care insurance policy, but the amount you can withdraw tax-free depends on your age. Learn the specific monetary values you can withdraw tax-free by reading below.
Question: Can I take out money tax-free from my health savings account to pay my long-term care insurance premiums? If so, how much is tax-free?
Answer: Yes, you can take money from your HSA (health savings account) to pay your long-term care insurance premiums. The maximum annual tax-free amount is based off of your age.
If you’re 40 or younger, you can withdraw up to $420 tax-free from a HSA in 2019 to pay the premiums. If you’re 41 to 50 years old, you can take out $790. For people 51 to 60, $1,580 can be taken out. If you’re 61 to 70 years old, you can take out $4,220. If you’re 71 or older, you can take out $5,270. If you and your spouse both have long-term care policies, you can each use tax-free money from your HSA to pay premiums, up to the aged-based maximum for each of you (based on your ages by the end of the year). These limits slightly increase each year due to inflation.
To qualify, the long-term care policy must only cover long-term care services. It also must pay out if you need help with at least two activities of daily living or have cognitive impairment. Most traditional long-term care insurance policies qualify. If you’re not sure, ask your insurer if your policy is “tax-qualified”.