Health Savings Accounts -- Special Ed Financing

Parents and Professionals

My name is Stuart Slonin and I specialize in helping Employers and Employees develop appropriate insurance and financing systems for their individual needs. For the past ten years, I have trained professionals around the country on the use of new planning tools such as Medical and Health Savings Accounts. Medical care and treatment has become very specialized in the United States. During the 40 years of my involvement in the financial services business -- the requirement for providing financing systems for clients has become increasingly more complicated.

Today consumers are concerned with how they can afford some of the treatment recommendations made by medical practitioners. Their personal and professional lives have become more complex -- and the easy answers of the past no longer apply.

I have worked with Mira and Mark Halpert from 3D Learner (an education program to help struggling students) on a number of issues, and they have asked me the following question.

What are the key points that parents and professionals should know in order to maximize the benefits from Medical and Health Savings Accounts with respect to students who have Special Education needs?

While your Medical Insurance will not typically cover Special Education Program -- IRS Section 213 explains what expenses are not covered. IRS Publication 502 provides a broader definition for expenses that could be reimbursed from a Medical or Health Savings Plan.

Special Education

You can include in medical expenses fees you pay on a doctor's recommendations for a child's tutoring by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by a mental or physical impairments, including nervous system disorders.

You may include in medical expenses the cost (tuition, meals and lodging) of attending a school that furnished special education to help a child overcome learning disabilities. A doctor must recommend that the child attend the school. Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the education provided.

While this indicates a doctor must recommend the program, we have seen insurance companies require that the program be recommended as a Medical Necessity before they reimburse the cost of the program. HOW your physician words the recommendation will be critical for reimbursement purposes. While you may want to provide them with this note, it is important to respect their professional integrity.

In planning your contribution level for funding account type programs, you will want to take into consideration expected medical and special education expenses for the year.

The savings to an employee who establishes a Health Savings Account (HSA) can be significant. For example, if you were to spend $3,000 on a program and you are in the 40% bracket for after tax dollars, you would have to earn $5,000 in pre-tax earnings to cover this expense. If you established an HSA and were able to cover this expense through the HSA – the cost would only be $3,000 in pre-tax dollars.

If you would like more information on HSAs or Medical Savings Accounts you can contact me by e-mailing Mark and Mira Halpert at hsa@3dlearner.com and they will forward the request to me.

Note from 3D Learner
We strive to provide you with the best advice possible. If you are a professional and would like to share information, we will be glad to discuss the possibility. If you are a parent and either have information to share or a question to ask, please contact us either by e-mail at success@3dlearner.com or call Mark and Mira Halpert at 954-341-2578

The information on this blog may not always reflect your situation and we always recommend that you confirm what you read here with a professional and your own research.

In a future note we will discuss the deductibility of Special Education prescribed by a physician as a Medical Expense if your Medical plus prescribed Special Education expenses exceed 7.5% of your Adjusted Gross Income.