HSA - Paying out of pocket and then reimbursing self?

[Dragline]

We currently have an HSA. If I pay for medical expenses using non-HSA funds and keep the receipts, can I write a check to myself at the end of the year from my HSA to reimburse myself? Or, is this frowned upon by the IRS?

[Sidney]

As long as you can support the amounts with the proper receipts, there should be no problem with this approach.

[ThePrune]

I do this also. Once again, best advice is to keep careful records.

[vesalius]

We currently have an HSA. If I pay for medical expenses using non-HSA funds and keep the receipts, can I write a check to myself at the end of the year from my HSA to reimburse myself? Or, is this frowned upon by the IRS?

No problem as long as you have the documentation. Actually, under current law you reimburse yourself several years later. You do not lose the ability to reimburse yourself by waiting. So, if you do not need the money at the end of the year, just let it ride in the HSA until you actually do need the money. As long as you keep that documentation for unreimbursed medical expenses you could reimburse yourself 3 years later and use the money to go on vacation, if you chose too.

[dandan14]

Agreed. Save your receipts and then write yourself a check from your HSA. I called my HSA a month or two ago to verify this and they verified.

[archbish99]

Given that there's no specified time period (yet), I've heard of people who just save all their receipts and intend to use them to substantiate large tax-free withdrawals come retirement.

The accounting on that seems like it would be a nightmare, regardless of the tax benefits.

[mhc]

Given that there's no specified time period (yet), I've heard of people who just save all their receipts and intend to use them to substantiate large tax-free withdrawals come retirement.

The accounting on that seems like it would be a nightmare, regardless of the tax benefits.

The accounting is easy. I put every medical receipt into a shoebox #1. When I need the money, I pull out a few receipts and withdraw that amount of money. The receipts go in the shoebox #2 for that years taxes. This is hypothetical for me, because I have never withdrawn money. I am just adding to my HSA and shoebox #1 every year.

[Alan S.]

At year end if you have very high medical expenses and 7.5% of AGI floor for the deduction does not wipe out much of the expense, and you can otherwise itemize, do not reimburse that year because itemizing writes off enough of the expense and allows your HSA to grow.

Itemizing medical expenses and HSA account qualifying distributions are of course mutually exclusive.

Note that any reimbursed expenses cannot have been incurred prior to the date the HSA is opened.

[Wagnerjb]

I do this too. I could a) either use my personal credit card to pay for medical bills, then claim reimbursement later, or b) use HSA checks or the HSA credit card.

The main difference for me is that I get frequent traveller points for charging the medical costs using my main credit card.

Best wishes.

[FrugalInvestor]

Given that there's no specified time period (yet), I've heard of people who just save all their receipts and intend to use them to substantiate large tax-free withdrawals come retirement.

The accounting on that seems like it would be a nightmare, regardless of the tax benefits.

I account for all my medical expenses for tax purposes anyway since I'm retired (early) and buy private insurance. I use whatever I need to get to get into the lowest tax bracket possible and save the rest for future withdrawal from our HSA. I doubt that we'll need the backup as we'll likely have other out-of-pocket expenses as we age but it's nice to know that we have immediate access to the money should the need arise.

[Dragline]

Thank you to everyone for your responses! Since it sounds like it doesn't matter either way, we are going to look into paying for everything with non-HSA funds and then reimburse ourselves later. This is much easier for us from an administrative perspective, and we'll be able to take advantage of the rewards on our rewards credit card.

Also, thank you to those of you who mentioned that you can reimburse yourself much later (and not just in the same year). I was not aware of this and will look into if it makes sense for us.

[BL]

I have a small HSA and plan to reimburse Medicare fees when I feel like it (either past or payments of future ones). Since it is small, I may just use it up to simplify things.

[cafranci]

Also, thank you to those of you who mentioned that you can reimburse yourself much later (and not just in the same year). I was not aware of this and will look into if it makes sense for us.

This comes up from time to time on the board, so I finally bookmarked the IRS guidance on this question for myself in case people want to see it written down. See Q-39 on this page.