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First of all, you can't do both. If you pay for medical expenses with an HSA, you can't also take a tax deduction, because you already paid with tax-free money. Paying for medical expenses with a loan or credit card in 2016 counts as paying them in 2016, even if you won't pay off the loan until later. But not if you intend to pay it off with an HSA.
Secondly, you can only deduct OR use the HSA for "qualifying" medical expenses. Qualifying expenses are those listed as deductible in publication 502. https://www.irs.gov/pub/irs-pdf/p502.pdf
In particular, you can't deduct or use an HSA to pay for cosmetic procedures. For dentistry, you can deduct or use an HSA to pay for care that prevents disease, and care that treats disease or injury to your teeth. But cosmetic procedures, such as teeth whitening or veneers, are not qualified for a deduction or HSA unless they are part of the treatment for a disease or injury.
CareCredit is simply a credit card used to pay for out-of-pocket medical expenses and is not any kind of insurance.
Payments made to reduce the balance owed on a credit card are not themselves qualified medical expenses. However, there is nothing wrong with obtaining a distribution from your HSA to reimburse yourself for out-of-pocket medical expenses incurred after the establishment of the HSA originally paid with the credit card (or money from any other source) as long as you did not claim a medical-expense deduction for those out-of pocket medical expenses, then using the money distributed from the HSA to pay off some portion of the credit card balance (or whatever else you want to do with the money). The HSA distribution corresponds to the qualified medical expense, not to the credit-card payment.
I had the same question. Short answer is No, you can not pay your monthly Care Credit payments with your HSA debit card or account. I contacted Care Credit Customer Service to check and they confirmed that in order to make the monthly payments on the Care Credit Card you would need to mail in a payment (check) or link your banks routing number up online. Below is a statement I found on Care Credit's website.
"Please note: Payment by FSA/HSA or credit card is not available. Payments are also not accepted directly at your provider's office as well."
Correct ... you cannot make a payment to Care Credit directly from the HSA however you can pay the bill yourself then reimburse yourself from the HSA ... hence the "washing" process that was mentioned above.
To reinforce dmertz's answer - you CAN use HSA funds to pay amounts on the CareCredit account that correspond directly to medical expenses, but you cannot pay for interest or service fees on the CareCredit card with HSA funds. If you use HSA funds to make payments to the CareCredit card, your records have to show how the HSA amounts where only for qualified medical expenses and not for credit card interest or other fees.
Question,
can I use my HSA to pay for veneers? I know for my case it won’t be for medical purposes. Is there a way to use the money but use it taxed? I’ve been saving up to fix my teeth and make them straight and this is the only form of money I have.
thanks
Cosmetic procedures are generally not qualified medical expenses. You can use a distribution from an HSA to pay for anything, but if it's not applied to a qualified medical expense the distribution is subject to ordinary income tax and, if you are under age 65 at the time of the distribution, to a 20% early-distribution penalty.
I had a dental procedure in 2019 and I paid with my CareCredit, which I have to pay until Jan 2021. Can I pay my remaining Balance in 2020 and file a claim to my HSA for the amount paid in 2020? This is my first year with the spending account and I am not sure how it works
My dental procedure was at the end of 2019 and I paid with my CreditCare, and but that time I did not have HSA, so now since 2020 I have an HSA, and still paying my CareCredit. is it possible to pay my Balance in 2020 and request a HSA reimbursement for the payment done during 2020?
Medical expenses are only eligible if the actual treatment or procedure occurred after the start of the HSA account. Now, if you previously had an HSA, and then closed it because you changed employers, and this is a new HSA, then the clock started with your first HSA. However, if this is your first HSA, your 2019 medical expenses are not eligible.
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