Can unusued reimbursement requests from old HSA transfer to new HSA?

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index2max
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Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by index2max » Mon Jun 29, 2020 6:48 pm

Hi all,

Here's a scenario I wanted to learn more about:

I am on a high deductible health plan with a health savings account (HSA) through my employer.

I have enough money stored up in my emergency account to pay for my medical expenses out of pocket. My HSA requires me to keep a base balance of $1000. I can invest any extra money above that amount in mutual funds. I also keep good records and upload photocopies of my receipts and medical to their online portal.

My HSA admin told me that if I change jobs, I will still be allowed to keep my HSA, but I would be responsible for paying the $1/month fee.

If I wanted to close the account with my current employer after changing jobs, the HSA admin could move the money over for me to the HSA with my new employer.

The problem is I apparently can't apply for reimbursement requests from new HSA for medical expenses that occurred with the old HSA.

Is it true that the IRS doesn't allow me to transfer my unused reimbursement request history from the first HSA to the second HSA?

Does that mean I would be better off having a second HSA with a company like Fidelity, which isn't tied to my employer? Then I could still contribute to the employer-sponsored HSA with pre-tax payroll contributions, then move the money over to Fidelity?

Just wanted to clarify the rules here as of June 29, 2020.

Thanks!

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FiveK
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by FiveK » Mon Jun 29, 2020 7:08 pm

index2max wrote:
Mon Jun 29, 2020 6:48 pm
The problem is I apparently can't apply for reimbursement requests from new HSA for medical expenses that occurred with the old HSA.
That may be a restriction imposed by the new HSA, but it doesn't have to be that way. Might be worth asking, using your situation as an example.
Is it true that the IRS doesn't allow me to transfer my unused reimbursement request history from the first HSA to the second HSA?
No, not true.
Does that mean I would be better off having a second HSA with a company like Fidelity, which isn't tied to my employer? Then I could still contribute to the employer-sponsored HSA with pre-tax payroll contributions, then move the money over to Fidelity?
Many people do exactly that. Might be worth doing even if the new HSA allows you to request reimbursements from older but still legitimate expenses, depending on the new HSA's investment options compared with Fidelity's.

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MP123
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by MP123 » Mon Jun 29, 2020 7:21 pm

You can't reimburse for expenses incurred prior to the opening date of an HSA. So if you're closing the old HSA and opening a new one that might be an issue. I'm not sure that you can get credit for having the prior account open when the expenses were incurred.

Perhaps you should reimburse prior to moving?

02nz
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by 02nz » Mon Jun 29, 2020 7:29 pm

MP123 wrote:
Mon Jun 29, 2020 7:21 pm
You can't reimburse for expenses incurred prior to the opening date of an HSA. So if you're closing the old HSA and opening a new one that might be an issue. I'm not sure that you can get credit for having the prior account open when the expenses were incurred.

Perhaps you should reimburse prior to moving?
From the IRS (https://www.irs.gov/publications/p969)

For HSA purposes, expenses incurred before you establish your HSA aren’t qualified medical expenses. State law determines when an HSA is established. An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established.

So it would seem OP should be able to reimburse current expenses from the new account as long as OP does a rollover.

Lyrrad
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by Lyrrad » Mon Jun 29, 2020 7:36 pm

One can't reimburse for expenses prior to the establishment date of an HSA (establishment date determined by state law but is usually the date that the account is initially funded and one is eligible for an HDHP). However, one can transfer the establishment date to another HSA:

From IRS Publication 969:
IRS wrote:For HSA purposes, expenses incurred before you establish your HSA aren’t qualified medical expenses. State law determines when an HSA is established. An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established.
This page claims the establishment date is carried over to subsequent HSAs as long as one doesn't have a 0 balance in all HSA accounts for an 18 month period.


My understanding is that HSA are not responsible for determining if an expense is eligible for reimbursement anyways. You should be able to request a distribution at any time. One then declares on their tax return if the distribution was for a qualified expense or not, and this is subject to IRS audit.

TropikThunder
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by TropikThunder » Mon Jun 29, 2020 10:18 pm

Lyrrad wrote:
Mon Jun 29, 2020 7:36 pm
My understanding is that HSA are not responsible for determining if an expense is eligible for reimbursement anyways. You should be able to request a distribution at any time. One then declares on their tax return if the distribution was for a qualified expense or not, and this is subject to IRS audit.
Correct. The HSA custodian may ask for an explanation for the distribution but that’s to help with record keeping on your end, not because they have a reason to know. If you have a debit card attached to the HSA you can even just take money out at an ATM.

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index2max
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by index2max » Tue Jun 30, 2020 9:08 am

Thanks for all your answers.

Guess I’ll need to talk to my tax accountant and have him look into whether I can transfer unused reimbursements from one HSA to another while both are active?

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FiveK
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by FiveK » Tue Jun 30, 2020 8:23 pm

index2max wrote:
Tue Jun 30, 2020 9:08 am
Thanks for all your answers.

Guess I’ll need to talk to my tax accountant and have him look into whether I can transfer unused reimbursements from one HSA to another while both are active?
Just checking: are these HSAs or FSAs? The phrase "transfer unused reimbursement" is unusual.

Spirit Rider
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by Spirit Rider » Tue Jun 30, 2020 11:25 pm

index2max wrote:
Tue Jun 30, 2020 9:08 am
Guess I’ll need to talk to my tax accountant and have him look into whether I can transfer unused reimbursements from one HSA to another while both are active?
As has been pointed out, If there is no period > 18 months of $0 HSA balances since the establishment date of the first HSA account. An individual HSA account can be used to take tax-free distributions for qualified medical expenses that occurred before, during and after contributions were made to that account as long as the dates of service were on or after the establishment date of the first account. You can also take distributions when you are are not eligible to make HSA contributions.

You are mistakenly trying to assert a dependency that does not exist.

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teen persuasion
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Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by teen persuasion » Wed Jul 01, 2020 6:34 am

It sounds like the issue revolves around the online portal thru the current HSA provider. That's a perk that doesn't exist for every HSA provider, so it probably won't carry over to a future (different) provider. You need to keep your own records.

Topic Author
index2max
Posts: 285
Joined: Mon Jan 21, 2019 11:01 pm

Re: Can unusued reimbursement requests from old HSA transfer to new HSA?

Post by index2max » Wed Jul 01, 2020 10:13 pm

FiveK wrote:
Tue Jun 30, 2020 8:23 pm
index2max wrote:
Tue Jun 30, 2020 9:08 am
Thanks for all your answers.

Guess I’ll need to talk to my tax accountant and have him look into whether I can transfer unused reimbursements from one HSA to another while both are active?
Just checking: are these HSAs or FSAs? The phrase "transfer unused reimbursement" is unusual.
I'm talking about a health savings account, not a limited flexible spending account.
Spirit Rider wrote:
Tue Jun 30, 2020 11:25 pm
index2max wrote:
Tue Jun 30, 2020 9:08 am
Guess I’ll need to talk to my tax accountant and have him look into whether I can transfer unused reimbursements from one HSA to another while both are active?
As has been pointed out, If there is no period > 18 months of $0 HSA balances since the establishment date of the first HSA account. An individual HSA account can be used to take tax-free distributions for qualified medical expenses that occurred before, during and after contributions were made to that account as long as the dates of service were on or after the establishment date of the first account. You can also take distributions when you are are not eligible to make HSA contributions.

You are mistakenly trying to assert a dependency that does not exist.
I'm not asserting anything, I just don't want to make assumptions about what's allowed only to find out after the fact that I can't do something in the future.

If it turns out that all I need to have is an active HSA until I hit age 65 (when I can start using medicare) in order to reimburse myself for past medical expenses, then great!

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