Nice. I need to look into this in about nine years.
Then again, I would be eligible for USA Medicare benefits by then. Like a Sophie’s Choice…
I can just ask for $x and I get a reminder that I need to have receipts for $x. And I don’t actually save receipts or bills. I download EOB information from my insurance company because that shows my out of pocket amount.
I will say we’ve been close enough to $0 the last several years on the HSA that it hasn’t mattered. We’ve finally built up a balance but I have a lot of outstanding bills from the last month and a big one coming up.
there are two reasons to save receipts, which i think people are conflating here.
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using the HSA as an investment. But no reason to save receipts, unless you don’t believe you will use it up in the future. Really just need to save larger bills, not every CVS purchase. There has to be some past point that is too far back to be reimbursed. Even in Canada, i would think there are enough future pharmaceutical purchases to use it up eventually.
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Receipts for audit. i guess this could be 7 years, but i use a Credit Card and run by my 401k, so i can always retrieve my records.
Audits must be almost impossible, how do they know there was no non-medical in my CVS purchase?
I’ve never been audited, but I have real estate investments so talk to people who have, and I have been told the burden of proof is on you not the IRS. That means you must have evidence that an item is deductible and given a purchase at CVS could be 100% non-medical a credit card charge is not sufficient.
Obviously the things I hear about are not HSA related per-se, but the idea is similar.
My HSA card no longer works for non-medical purchases. It used to… I could use it at McDonalds. And I did use it for non-medical stuff on occasion when I had a medical provider that wouldn’t take credit cards. (Like I wrote a provider a check for $50, then if I was buying something for $47.82 at Home Depot I’d say “close enough” and use my HSA card to buy it and forget about the $2.18 difference.)
But now if I use it at the pharmacy counter I can’t even use it to pay for OTC meds that I have a prescription for.
That is certainly true.
Interesting. Not sure when I last tried, if I ever did. Pretty sure I have if the primary purchase was the pharmacy
actuaries, amirite?
Ew, I wonder if that means rollovers shorten your window. Likely does.
Are you asking if rolling over your HSA shortens the window for reimbursement or an audit? I don’t see why it would affect either. It is your money, where it is stored is (mostly) irrelevant.
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I suppose the rolled-to account must keep transaction dates for taxes purposes, so that makes sense. I was thinking it restarted the window.
so i have an HSA and a limited FSA.
I use the limited FSA for medical spending between deductible and OOP max. But I can in the future just use the receipts from the transactions from $0–>Deductible as a retirement ATM code for my HSA. And there is no time limit on that? Am I reading this right?
You must keep records sufficient to show that:
- The distributions were exclusively to pay or reimburse qualified medical expenses,
- The qualified medical expenses had not been previously paid or reimbursed from another source, and
- The medical expenses had not been taken as an itemized deduction in any year.
Not an IRS.gov source but is credible: HSA Receipt Documentation | Lumity Knowledge Base
Seems your interpretation is correct. Store up those 2022 receipts for 2050.
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How the heck do you prove something didn’t get reimbursed?
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This is why HSAs are a double-tax advantaged account. It’s an FSA * a Roth IRA.
Money goes in pre-tax, comes out post-tax for a medical expense, and you can just pull the money out at your tax bracket if you want.
Realistically the ideal play is
- 401k to match(Roth or Trad)
- HSA to max
- Your choice of Roth or Trad 401k or IRA to max.
- whichever remains from last step
- Taxable brokerage
I dip into 5 the amount I want as fun future slush money, for vacations. All else goes in 1-4 (though we are far from a 2-person quad max. 1-3 is a goal out of our reach, for now.)
No idea, but at the same company you might easily get popped. Either way I don’t want to mess with the IRS.
If worse comes to worse …
At age 65, you can take penalty-free distributions from the HSA for any reason .
There’s a 10% penalty if you’re younger than some approximately-retirement-age cutoff. But if you’re older than the cutoff then there’s no penalty if you withdraw for hookers & blow; it’s just taxed as ordinary income, same as pretax money from an IRA would be.
I can’t recall the relevant age where the penalty goes away… think it might be 65.
Ok my understanding is that if you have an HSA, your FSA can only be used for dental and vision and NOT to meet your deductible on medical, so you might want to check the rules there.
The rules on Limited Purpose FSAs are quite strange. Legally you can use them for some medical stuff as @tommie.frazier describes, but I think it’s such a hassle for the administrator to verify that the use was proper that in practice most employers choose to restrict their use to only dental & vision, which the employer is 100% allowed to do.
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Good to know.