Pub. 8 2018-2019 Issue 3

8 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S this type of care is not medical, then only the medical expenses are qualified) • In-home nursing services connected with patient care In-Home Care Let’s face it, most people prefer to hire help at home rather than go into a medical institution. So, a frequent question is, “Can HSA savings be used for in-home care?” As described in IRS Publication 502, Medical and Dental Expenses, the IRS does allow this for long-term care services that meet these two requirements. 1. Required by a chronically ill individual 2. Prescribed by a licensed healthcare practitioner as part of a care plan Home care expenses may not be fully qualified—only the portion of the expense paid for direct medical care is allowed. For example, if home support personnel spend 20 percent of their time cleaning the residence, then that 20 percent is not qualified. If using theHSA savings for in-home care, individuals should document all expenses paid from the HSA, including documentation showing that the individual meets the IRS’ chronically ill definition. Definition of Chronically Ill According to the IRS, an individual is “chronically ill” if within the previous 12 months, a licensed healthcare practi- tioner has certified that the individual meets one of the fol- lowing descriptions. 1. The individual is unable to perform at least two activi- ties of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capac- ity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. 2. The individual requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Family Assistance with Home Care So let’s take this one step further. Most people would prefer to have a family member or close friend assist them with in- home care if that option is available. Following definitions as outlined in IRS Publication 502, a family member may provide services if the services are similar to what a nurse provides (e.g., providing medication, change of dressings, bathing, and grooming). If meeting this requirement, HSA savings could be used for these expenses. While there is no prohibition against a relative providing these services, I strongly recommend that the HSA owner document and maintain itemized receipts for payment in the event the IRS later questions it. Share the Concept As you can see, there is flexibility in use of HSA savings beyond the common medical expenses that most people are aware of. Whether you are a bank, credit union, or financial advisor, you can now outline yet another HSA savings benefit and another reason HSAs can be a key financial planning tool for a more secure retirement. I can tell you that by the time I finished this conversation with the initial couple, others were listening in. It is a message that people are looking for. n Steven Christenson is Executive Vice President of the Ascensus Retirement Products and Solutions (RPS) Group. Based in Brainerd, MN, RPS carries a 35-year history of providing premier products, expert consulting services, and total business solutions to financial organizations seeking to achieve and maintain compliance, and to capture market share in the IRA and health savings account industry. As Executive Vice President of RPS, Mr. Christenson is responsible for managing and developing Ascensus’ product lines and services, which includes web-based technology, education and resource development, forms and documents, telephone and on-site consulting, and enrollment meeting support. Mr. Christenson’s background before joining Ascensus includes nine years of manage- ment experience in the financial services market where he was employed by a large national bank in Minneapolis, MN. While there, he successfully managed and grew three different “brick and mortar” branches in the Minneapolis/St. Paul area, opened and managed one of the first and fastest growing in-store branches in the bank’s history, and developed a management and branch staff commission and incentive program used throughout the branch system. He also obtained his Minnesota Life/ Health Insurance license and his Series 6 and Series 63 securities licenses. Mr. Christenson holds a Bachelor of Science degree in business from the University of Minnesota’s Carlson School of Management, Minneapolis, MN. Ascensus helps more than 7 million Americans save for the future—retirement, college, and healthcare—through service and technology solutions. With more than 35 years of experience, the firm offers tailored solutions that meet the needs of banks, credit unions, states, governments, financial professionals, employers, and individuals. Ascensus supports over 54,000 retirement plans, more than 4 million 529 college savings accounts, and a growing number of ABLE savings accounts. It also administers more than 1.5million IRAs and health savings accounts. As of December 31, 2017, Ascensus had over $163 billion in total assets under administration. For more information about Ascensus, visit www.ascensus.com . While there is no prohibition against a relative providing these services, I strongly recommend that the HSA owner document and maintain itemized receipts for payment in the event the IRS later questions it.   continued from page 6