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How health savings accounts have adjusted for the coronavirus pandemic

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Your health savings account may be able to give you some extra help during the coronavirus crisis.

An HSA is a savings account you can use to pay for qualified medical expenses. You contribute money pre-tax, the savings grow tax-free and your withdrawals generally aren't taxed. HSAs are available only to those who have high-deductible health-care plans.

"Now, more than ever, you can use your HSA to address today's health and financial challenges," said Alison Moore, vice president of marketing for HSA provider HealthSavings.

"As we begin to realize the financial impact of Covid-19, there are several ways a Health Savings Account can be used to address immediate concerns."

In order to qualify for an HSA, your health plan must have an minimum deductible of $1,400 for an individual and $2,800 for a family. You can contribute up to $3,550 a year for self-only coverage and up to $7,100 a year for family coverage.

Changes in legislation have now opened up more coverage for those who have such a plan. However, the best way to take full advantage of your benefits will differ depending on your circumstances, Moore said.

For instance, if you are one of the millions of Americans who have been furloughed or laid off, HSA funds can be used to pay for health insurance premiums, including COBRA, which allows some workers to keep their previous health coverage after unemployment.

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You can also use an HSA for much-needed cash right now.

People are "looking for liquidity in these times of uncertainty," said Charlene Quaresma, a financial advisor with Northwestern Mutual in Portland, Oregon.

If you were trying to save your HSA funds for the future, you may need to use them now to cover medical expenses, instead of tapping into your emergency savings.

You can also get cash in hand to reimburse yourself for previous expenses out-of-pocket expenses you already paid for, noted Moore.

If you are looking toward future health-care costs, you can continue to make contributions. Because of the pandemic, the IRS extended tax filing until July 15, which means you have more time to max out your 2019 HSA contribution limits.

What's covered

When it comes to what you can use the money in your HSA account for, it varies from standard medical expenses — such as deductibles, co-pays, co-insurance, prescriptions and vaccines — to emergency preparedness items.

But thanks to the legislative changes, high-deductible health-care plan participants no longer need to worry about paying for the testing and treating coronavirus if they haven't reached their deductible. The plans can cover the costs without losing their status as a high-deductible plan.

HSA-qualified plans can now also be used to temporarily cover telehealth or other remote-care services below the deductible. Over-the-counter drugs and medicine can now be purchased using your HSA without a prescription, as can feminine hygiene products, according to HealthSavings.

That means that items such as thermometers, batteries for medical devices, contact lenses and solution, prescription glasses, cold and allergy medicine, and first aid items like bandages, gloves and cleansing wipes are all covered. Vaccines are also covered.

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If you find yourself anxious or depressed because of the isolation you're experiencing during the pandemic, you may use the money for a therapist, as well as drug and alcohol dependency programs, said Northwestern Mutual's Quaresma.

HSAs can also be used for alternative treatments for things like stress and anxiety — think acupuncture or massage, she said.

"When this is over, that self-care is really important," she said.

Saving for the future

While they may help out in the short term, HSAs are a great way to invest money to cover health-care costs in retirement, Quaresma said.

"You want to look at an HSA like your 401(k)," she said. "You have the opportunity to put money away, pre-tax, and save for the future."

Just make sure you know how much of your money is in cash and how much is in other investments, like mutual funds, said HealthSaving's Moore.

"[People] should at least make a conscious decision about where they are keeping their money," she said.

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Finding a plan

The first thing you should do is see if your employer offers a plan, and if so, whether they contribute to it.

In fact, with many people home now, it is a good time to go through your employer's benefits to see what is offered, Quaresma said.

You can also get an HSA through a credit union, brokerage and some banks.

Quaresma suggests committing to a certain dollar amount to put away month over month and year over year. If possible, contribute the maximum allowed.

"We are all in this together but, at the end of the day, you need to handle the risk management part of things for yourself and look at the tax leveraging that you can utilize," she said.

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