HSAs and "Saving Medical Receipts"

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dodecahedron
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Re: HSAs and "Saving Medical Receipts"

Postby dodecahedron » Wed Jun 14, 2017 12:18 pm

ChrisC wrote:I think there are sound reasons for not keeping medical receipts for a long period of time, but difficulty in proving an entitlement to HSA reimbursement is not one of them. If you can prove entitlement today, you should be able to prove that 10 or 20 years later if you keep a good head on your shoulders and keep the requisite records.


I have to wonder if our differences in perspective are due to differences in age. I started contributing to an HSA three years ago at age 61. I will turn 64 later this year. The odds that I can keep a "good head on my shoulders" in 20 years may not be as good as yours. Keeping a good head on my shoulders is certainly my hope but not something I can take for granted.

I am in wonderful health now but family history suggests the real possibility of a sudden incapacitating stroke a decade or more down the road. Having lost a spouse completely unexpectedly to a heart attack at the age of 59, with no opportunity to provide last minute instructions (went to sleep in apparent perfect health and simply did not wake up), I am acutely mindful of trying to minimize the paperwork burdens and stress on those who may be caring for me and my finances when I am no longer able to do so. Asking my loved ones to paw through decades of indecipherable and inscrutable medical statements with their mystifying descriptions trying to figure out what procedures they involved when I may be incapable of answering their questions is not something that makes me feel good. I also note that records of medical expenses for dependents could also raise privacy issues decades down the road if another family member is handling these records.

At this point, the idea of saving receipts for reimbursement decades down the road is actually moot for me because so far I actually have had enough medical expenses (including my ACA premiums on a family coverage high deductible bronze policy, out-of-pocket medical, dental and vision--and no insurance coverage for either of the latter two) that I have been able to itemize all current medical expenses on Schedule A in all years since I started the HSA.

By 2019, I expect my medical expenses to go down quite a bit (I will be on Medicare the whole year, will not have family dependents to cover, etc.) and also expect to have a higher AGI (since I will claim SS survivor benefits when they reach their maximum at my FRA) so I will likely stop itemizing. At that point, I will need to make a decision about whether to save receipts or currently reimburse.

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dodecahedron
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Re: HSAs and "Saving Medical Receipts"

Postby dodecahedron » Wed Jun 14, 2017 12:35 pm

ChrisC wrote:Admittedly, this could be an issue for vision or dental work if you don't have insurance coverage there. I've been fortunate to have insurance there and I get very detailed EOBs from my separate dental insurance carrier.


Again, a difference in perspective. I don't have either of those kinds of insurance so I don't get EOBs for those expenses. Also, my health insurance coverage is an HMO (the only kind of individual coverage available to me at the moment) and while the network is generally excellent, there are times when I or my dependent decides to use a non-network provider and pay out-of-pocket. (After all, we generally do not expect to reach our large family deductible anyway.) No claim would be filed and we would have no EOB in that case.

As noted above, I am currently itemizing these deductions each year on Schedule A and odds are excellent that I will be able to reach my current providers within the next few years if those expenses trigger an audit and obtain any additional information that might be needed to justify those expenses as deductible. So, for now, I simply retain my itemized statements from the provider and bank/credit card records, knowing that any IRS or NYS tax queries will come within the next few years and can most likely be readily addressed if need be.

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Re: HSAs and "Saving Medical Receipts"

Postby ChrisC » Wed Jun 14, 2017 2:47 pm

Dodecahedron, I'm not sure we are far apart in our respective perspectives and any difference is certainly not grounded in age or experiences in sifting through medical records or medical expenses of loved ones. I turn 64 later this year and I've had to plough thru medical records and expenses of three loved ones in paying their bills, managing their finances and sheparding them into LTC facilities, most recently.

My posts here were in rebuttal to the idea raised that annually reimbursing yourself from an HSA places one in a better position to fend off an IRS audit, in the sense I gathered from others, that the recency of a claim for reimbursement allowed one to fix or cure problems with the claim. I disagree with that thinking as indicated before. Meanwhile, I share your view and that of others here that saving receipts for the electronic record challenged can be a major hassle and that sorting out reimbursement from such records can be mind-boggling, especially by a surviving spouse. With that in mind, we started to reimburse ourselves from our HSAs for a number of medical expenses from prior years and some on an on-going basis.

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FIREchief
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Re: HSAs and "Saving Medical Receipts"

Postby FIREchief » Wed Jun 14, 2017 3:08 pm

*3!4!/5! wrote:It should be extremely obvious to anyone who puts a little thought to it, that there are a variety of situations where there is no EOB to be had.

Moreover, there are many other obstacles to compiling the needed documentation. If you actually bother to think about it, you'll realize that it's basically impossible to truly prove what needs to be proved.


Yet, we haven't heard any IRS HSA claim audit horror stories. The few reports we've had suggest that the types of approaches others have shared are more than sufficient with the IRS.

You keep stating things like "often, EOBs don't exist," yet you've failed to share some meaningful examples (while multiple others have shared their ease in obtaining EOBs for most/all expenses). Sure, you're not going to get an EOB when you buy a bottle of saline solution or allowable over the counter medication, so just claim those as you go. The vast majority of legitimate medical expenses are very easy to support with EOBs and payment receipts.

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Re: HSAs and "Saving Medical Receipts"

Postby *3!4!/5! » Wed Jun 14, 2017 3:31 pm

There probably won't be IRS HSA claim audit horror stories for those of us withdrawing our expenses once a year. These typically will be smaller amounts and won't prompt an audit anyway, and we just need to keep the documents for a few years. Medical providers typically won't provide needed documentation without a major battle, so you only cross that bridge if/when you come to it, but it's much better to keep it in the recent past.

But those planning to save 30 years receipts, then withdraw those expenses as a large sum in some future year, will attract IRS scrutiny and could have quite a nightmare. There's a definite sleep-at-night advantage to getting it out of the way.

Also it is extremely easy to realize a variety of cases where you don't get an EOB. I'm not going to waste time spelling out something so obvious.

But that's not even the main problem. The main problem is that you often cannot match any particular payment to a specific medical expense. You cannot document that that specific expense was paid for. Any given payment could have been for something else.

Also, yet another issue, how do you prove the non-existence of refunds and reimbursements?

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FIREchief
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Re: HSAs and "Saving Medical Receipts"

Postby FIREchief » Wed Jun 14, 2017 3:35 pm

ChrisC wrote: Doth protest too much.


LOL Nailed it. :beer

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Re: HSAs and "Saving Medical Receipts"

Postby deltaneutral83 » Wed Jun 14, 2017 3:51 pm

Why would you pay out of pocket and then make distributions at the end of the year while keeping meticulous records. I just assumed if you wanted to tap into the HSA you'd use the debit card or whatever at the time the expense is incurred and not have to keep track of anything? Am I missing something? I just always assumed those that paid out of pocket were holding onto receipts for years.

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Re: HSAs and "Saving Medical Receipts"

Postby *3!4!/5! » Wed Jun 14, 2017 3:55 pm

deltaneutral83 wrote:Why would you pay out of pocket and then make distributions at the end of the year while keeping meticulous records. I just assumed if you wanted to tap into the HSA you'd use the debit card or whatever at the time the expense is incurred and not have to keep track of anything? Am I missing something? I just always assumed those that paid out of pocket were holding onto receipts for years.
Using the HSA debit card doesn't save you from having to document. No matter what, that's on you, not the HSA company. Also there are other disadvantages and opportunity costs to using the HSA debit card.

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Re: HSAs and "Saving Medical Receipts"

Postby *3!4!/5! » Wed Jun 14, 2017 3:59 pm

FIREchief wrote:
ChrisC wrote: Doth protest too much.

LOL Nailed it. :beer

Your descriptions of medical billing practices are a bit too perfect and utopian. Reality doesn't have as much sprinkled pixie dust as you think.

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dodecahedron
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Re: HSAs and "Saving Medical Receipts"

Postby dodecahedron » Wed Jun 14, 2017 4:37 pm

FIREchief wrote:Yet, we haven't heard any IRS HSA claim audit horror stories. The few reports we've had suggest that the types of approaches others have shared are more than sufficient with the IRS.


HSAs are new enough that nobody has experienced the "audit after filing a return claiming reimbursement for decades of saved receipts" yet.

I *have* been through audits for other kinds of expenses (business expenses claimed on a Schedule C) and while it took place only a couple years after those expenses were incurred and ultimately wound up in a no-change situation, it wasn't fun and I would not have enjoyed trying to contemplate the inevitable issues that would come up in explaining and justifying the business purpose of those expenses decades after the fact. Among the fun things I remember from that audit was needing to explain to the auditor the source of the exchange rates we had used to translate expenses incurred in a foreign currency into US$ and also explaining that European receipts use commas where we use decimal points and vice versa.

Some business expenses have parallels to medical expenses (e.g., travel, including mileage, airfares and overnight lodging for medical treatment can be deductible in some circumstances but one of the conditions is that there be "no significant element of personal pleasure, recreation, or vacation" involved in the travel.) Annotations in a travel diary that would be sufficient for me to defend these deductions a few years after they were incurred might be challenging for me to make sense of decades later.

Among the "fun" things an audited person might have to prove if they claim medical expenses decades after they were incurred is that a person for whom they paid expenses was their "medical dependent," which requires demonstrating that you provided more than half of their support during the year the expenses were incurred. That can be tricky enough to do in many situations (e.g., young adult dependents, elderly parent dependents) a couple years after the fact but decades after the fact?

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Artsdoctor
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Re: HSAs and "Saving Medical Receipts"

Postby Artsdoctor » Wed Jun 14, 2017 5:01 pm

*3!4!/5! wrote:There probably won't be IRS HSA claim audit horror stories for those of us withdrawing our expenses once a year. These typically will be smaller amounts and won't prompt an audit anyway, and we just need to keep the documents for a few years. Medical providers typically won't provide needed documentation without a major battle, so you only cross that bridge if/when you come to it, but it's much better to keep it in the recent past.

But those planning to save 30 years receipts, then withdraw those expenses as a large sum in some future year, will attract IRS scrutiny and could have quite a nightmare. There's a definite sleep-at-night advantage to getting it out of the way.

Also it is extremely easy to realize a variety of cases where you don't get an EOB. I'm not going to waste time spelling out something so obvious.

But that's not even the main problem. The main problem is that you often cannot match any particular payment to a specific medical expense. You cannot document that that specific expense was paid for. Any given payment could have been for something else.

Also, yet another issue, how do you prove the non-existence of refunds and reimbursements?


But isn't this the very nature of HSA use? One can do either. It's perfectly fine to pay expenses directly, reimburse annually, or reimburse later. Everyone has a different threshold of "hassle factor." Like you, I wouldn't relish sitting across the table from an IRS agent no matter how solid I thought my document might be. However, my threshold for inconvenience might be different than yours.

It's within the confines of HSA rules to hold the reimbursement as long as you like. It's clear that the longer you hold it, the greater the hassle factor. If you reimburse yourself annually, you miss out on the potential for investment earnings but some people are just fine with that. Alternatively, some people just wouldn't reimburse--ever--unless there were extenuating circumstances, opting to use an HSA strictly for expenses in the retirement years. There are many, many ways to use an HSA and I can't see why someone would not acknowledge some built-in flexibility here.

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Re: HSAs and "Saving Medical Receipts"

Postby FIREchief » Wed Jun 14, 2017 5:11 pm

dodecahedron wrote:
FIREchief wrote:Yet, we haven't heard any IRS HSA claim audit horror stories. The few reports we've had suggest that the types of approaches others have shared are more than sufficient with the IRS.


Among the fun things I remember from that audit was needing to explain to the auditor the source of the exchange rates we had used to translate expenses incurred in a foreign currency into US$ and also explaining that European receipts use commas where we use decimal points and vice versa.

Some business expenses have parallels to medical expenses (e.g., travel, including mileage, airfares and overnight lodging for medical treatment can be deductible in some circumstances but one of the conditions is that there be "no significant element of personal pleasure, recreation, or vacation" involved in the travel.) Annotations in a travel diary that would be sufficient for me to defend these deductions a few years after they were incurred might be challenging for me to make sense of decades later.

Among the "fun" things an audited person might have to prove if they claim medical expenses decades after they were incurred is that a person for whom they paid expenses was their "medical dependent," which requires demonstrating that you provided more than half of their support during the year the expenses were incurred.


Fortunately, my qualified HSA expenses are all much more straightforward. I suspect this is true for many. I have no foreign currency payments, airline travel, lodging or medical dependents. If I did encounter such things, I would likely consider withdrawals from the HSA as incurred for the reasons you mention.

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dodecahedron
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Re: HSAs and "Saving Medical Receipts"

Postby dodecahedron » Wed Jun 14, 2017 6:03 pm

FIREchief wrote:
Fortunately, my qualified HSA expenses are all much more straightforward. I suspect this is true for many. I have no foreign currency payments, airline travel, lodging or medical dependents. If I did encounter such things, I would likely consider withdrawals from the HSA as incurred for the reasons you mention.


I agree that there is quite a bit of variability in the nature of qualified HSA expenses and reasonable people can make different decisions.

At this point, this will be my fourth year of contributing to an HSA (and next year's partial prorated contribution will be the last, since I expect to go on Medicare in 2018) but I have yet to incur any expenses with receipts that need saving for future HSA reimbursements since I am itemizing my current medical expenses on Schedule A. I will happily shred all those pre-2018 receipts, EOBs, and travel diaries before I turn 70.

My profound hope is that in years after age 65, when I do not expect to itemize since I will no longer have a very high deductible policy nor a medical dependent nor an expensive ACA policy, the lion's share of my HSA-qualified medical expenses will be for my own Medicare parts B and D premiums, which should be quite easy to defend in an audit if and when necessary, whenever they are claimed. I profoundly hope to be fortunate enough with LTC needs that my HSA goes to my designated charitable beneficiary.

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Re: HSAs and "Saving Medical Receipts"

Postby Artsdoctor » Wed Jun 14, 2017 6:45 pm

Dodeca,

If you've been contributing to your HSA for only four years, the sums that you will withdraw are very unlikely to raise any eyebrows with the IRS. I really think that you're going to be just fine without any hiccups.

I'm not a CPA but there are two scenarios which, to me, would raise red flags.

The first is for people who are filing Form 8889 for the HSA withdrawal and who are simultaneously declaring medical expenses on Schedule A. There's nothing wrong with doing both, but you just can't declare the deduction AND reimburse yourself. I can see where the IRS would want to make that you understand this and haven't "double-dipped."

The second red flag would be for extremely large withdrawals in any given year. How big? I don't know. Out-of-pocket expenses can easily be over $10,000 for someone needing medical care, but it would make me somewhat nervous taking disbursements over $50,000 in one year. You can DO it and have everything perfectly documented. But it would just make me apprehensive.

I have nothing support the above concerns, but they seem to be based on common sense (which admittedly has limitations with any bureaucracy).

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Re: HSAs and "Saving Medical Receipts"

Postby rocket354 » Wed Jun 14, 2017 7:07 pm

*3!4!/5! wrote:Using the HSA debit card doesn't save you from having to document. No matter what, that's on you, not the HSA company. Also there are other disadvantages and opportunity costs to using the HSA debit card.


Could someone explain this, please? I just started my first HSA recently and I've been researching how to best use it. Knowing how and why using the debit card is disadvantageous would greatly help.

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Re: HSAs and "Saving Medical Receipts"

Postby Helo80 » Wed Jun 14, 2017 7:12 pm

rocket354 wrote:Could someone explain this, please? I just started my first HSA recently and I've been researching how to best use it. Knowing how and why using the debit card is disadvantageous would greatly help.



I have an HSA, but have never withdrawn from it as my personal medical expense are so nominal that I end up just paying OOP.

That being said, with a debit card, you still keep receipts (without regurgitating this thread) so that you can prove the expense paid for with said debit card were in fact medically related in case the IRS ever audits you. You don't pay taxes on HSA contributions so they don't want people to abuse "tax-free" monies for unintended consequences.

The other opportunity costs are that if say you have a $10,000 HSA balance invested in a fund.... well, even if you legitimately use that money for health related expenses, you have to keep in the back of your head that you are foregoing any future gains/losses on said money spent.

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Re: HSAs and "Saving Medical Receipts"

Postby rocket354 » Wed Jun 14, 2017 7:23 pm

I have an HSA, but have never withdrawn from it as my personal medical expense are so nominal that I end up just paying OOP.

That being said, with a debit card, you still keep receipts (without regurgitating this thread) so that you can prove the expense paid for with said debit card were in fact medically related in case the IRS ever audits you. You don't pay taxes on HSA contributions so they don't want people to abuse "tax-free" monies for unintended consequences.

The other opportunity costs are that if say you have a $10,000 HSA balance invested in a fund.... well, even if you legitimately use that money for health related expenses, you have to keep in the back of your head that you are foregoing any future gains/losses on said money spent.


Thanks for your response. I do understand those ideas. I'll re-quote what prompted my question with the post to which it was replying.

*3!4!/5! wrote:
deltaneutral83 wrote:Why would you pay out of pocket and then make distributions at the end of the year while keeping meticulous records. I just assumed if you wanted to tap into the HSA you'd use the debit card or whatever at the time the expense is incurred and not have to keep track of anything? Am I missing something? I just always assumed those that paid out of pocket were holding onto receipts for years.
Using the HSA debit card doesn't save you from having to document. No matter what, that's on you, not the HSA company. Also there are other disadvantages and opportunity costs to using the HSA debit card.


This suggests there's something inherently disadvantageous to using the debit card vs saving receipts until the end of the year. Is it something more than just the handful of months that the funds could remain invested?

I ask because I had pretty much decided I didn't want to save receipts for 30 years, but would just use the funds "now." Knowing the difference between paying immediately or getting even at the end of the year would be useful.

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Re: HSAs and "Saving Medical Receipts"

Postby FIREchief » Wed Jun 14, 2017 7:53 pm

rocket354 wrote:
This suggests there's something inherently disadvantageous to using the debit card vs saving receipts until the end of the year. Is it something more than just the handful of months that the funds could remain invested?

I ask because I had pretty much decided I didn't want to save receipts for 30 years, but would just use the funds "now." Knowing the difference between paying immediately or getting even at the end of the year would be useful.


Reviewing original context, I believe that it referred to the fact that you can use a rewards CC and get 2% back, which you don't get if you use the debit card. I do agree with the other poster that using a debit card provides no advantage wrt record keeping.

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Re: HSAs and "Saving Medical Receipts"

Postby dodecahedron » Wed Jun 14, 2017 7:54 pm

Artsdoctor wrote:The second red flag would be for extremely large withdrawals in any given year. How big? I don't know. Out-of-pocket expenses can easily be over $10,000 for someone needing medical care, but it would make me somewhat nervous taking disbursements over $50,000 in one year. You can DO it and have everything perfectly documented. But it would just make me apprehensive.


Of course, folks with large LTC expenses might easily have more than $50K in qualifying expenses in a single year even if they are not saving up receipts. If the taxpayer's address on a tax return claiming over $50K in eligible HSA reimbursements is a nursing home, the IRS auditor might not raise an eyebrow, but otherwise, I think taxpayers claiming that much in reimbursable expenses in a single year should be prepared to set aside a significant chunk of their time to deal with the pretty much inevitable audit.

Having been through audits on complex deductions involving a large number of transactions from a single year (on non-medical matters), I can tell you they aren't fun, even if your documentation is meticulous (as ours was. I remember the fun of compiling a large binder with multiple tabbed sections to mail in to facilitate the lengthy phone discussion my husband and I with the auditor. We made a second copy of the binder for ourselves, so we could be "on the same page" when discussing the various issues under examination on the phone.)

Dealing with audits on large number of transactions claimed as excludible from income in a single year is not exactly how I look forward to spending my "golden years."

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Re: HSAs and "Saving Medical Receipts"

Postby deltaneutral83 » Thu Jun 15, 2017 8:00 am

FIREchief wrote:Reviewing original context, I believe that it referred to the fact that you can use a rewards CC and get 2% back, which you don't get if you use the debit card. I do agree with the other poster that using a debit card provides no advantage wrt record keeping.


Credit card perks, got it..... so I can go withdraw the $140 for my dental visit (hypothetically) even from the ATM out of my HSA (not that I am) and hang onto the receipt from my dentist's office and this will suffice? I realize msot people are probably waiting until Dec 30th to shore up their HSA situation but I don't visit the Dr. except for the dentist.

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Re: HSAs and "Saving Medical Receipts"

Postby ChrisC » Thu Jun 15, 2017 10:07 am

deltaneutral83 wrote:
Credit card perks, got it..... so I can go withdraw the $140 for my dental visit (hypothetically) even from the ATM out of my HSA (not that I am) and hang onto the receipt from my dentist's office and this will suffice? I realize msot people are probably waiting until Dec 30th to shore up their HSA situation but I don't visit the Dr. except for the dentist.


Yes, to your question. What other information would suffice for the HSA distribution? In the rare case of an audit, the IRS might ask for your tax return to show that you didn't claim this dental payment as a deduction on your return, which I presume is highly unlikely as you probably won't meet the 10% or 7.5% threshold levels, I think the only issue you might have to be careful about is refunds of payment from your dentist because they mistakenly over billed you. I've had this happen on so many occasions from dental services because of my dental insurance coverage -- they over bill us for crowns, root canals, implants and refund us the over-payment amount resulting from insurance coverage. And though we have excellent dental insurance (yearly premiums of $320, but cover 80% of crowns and root canals, 60% of implants with no missing teeth exclusion, with two free annual check-ups, up to an annual cap of $3000 per family member), the insurance company and dentist office managers frequently get my coverage wrong.

To a lesser extent, I get refunds from my doctors and other medical providers, as well. But generally, I'm able to let the over payment ride on a credit back to the provider for the next visit.

I charge all deductibles, co-pays, and other out-of-pocket medical and dental expenses on my rewards credit cards. So I get my rewards, have another layer of documentation. Well, my perspective might be different from people who don't get EOBs, separate medical provider billing statements, and credit card statements, but I'm really confident that if I have to prove my entitlement to $15K in out-of-pocket dental charges I've incurred since 2009, I have the documents to back this all up. I really don't see the difference in this from any other claim that might draw attention from the IRS like 1031 exchanges or huge charitable contributions: the IRS can always go back 3 years to audit your returns if they see red flags or randomly pick you out for an audit.

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Re: HSAs and "Saving Medical Receipts"

Postby inbox788 » Thu Jun 15, 2017 1:35 pm

tadamsmar wrote:
I'm skeptical of the receipts method, and it's a lot of hassle for me, so I'm more inclined to simply spend it.


You should save the records for a while for possible audits anyway. Is it really a hassle to not throw away records that you have already saved?


It's quite likely I didn't save the records in the first place, but if the qualified expense is recent, then getting one would be possible. After a long time, like others have pointed out, it might be hard.

dodecahedron wrote:
Spirit Rider wrote:The point is that you still need to keep the same three proofs even if you pay/reimiburse from the HSA in a timely manner. The three year clock starts ticking from the tax filing deadline for the tax year of reimbursement. So the only difference is how long you have to keep the proofs. With current technology, does that really matter whether it is 3 or 33 years.


Yes, it does. Imagine if the IRS challenges an expense for something like dermatology, plastic surgery, or orthodontia, saying you have no proof that it was not cosmetic. If the expense was incurred three years ago, the medical records to document the justification for the expense are more likely to be still available. That's a lot dicier 33 years later.

Isn't it most likely that the insurance company decides expenses are cosmetic and generally doesn't cover those? What are some common insurance covered cosmetic procedures or policies? If the insurance company paid for it, I'd hazard to guess the IRS won't challenge it. If they didn't pay for it, then you may likely need more documentation.

Spirit Rider wrote:The best way to solve the problem of Medicare Supplement premiums not being qualified medical expenses is not to self-insure Medicare Part B/D out-of-pocket entirely. Better to constrain the risk while gaining most of the benefit by enrolling in Plan F high-deductible and self-insuring just the deductible (2017 = $2,200).


Plan F is a good plan to limit risk, but has higher cost that can't use MSA funds. And limiting deductible means having a lower maximum MSA that can be applied to qualified expenses. If one used Medicare $2000/year (MSA), plan F $2000 (cash), and $2,200 annual deductible, and planned for 30 years, one would need no more than $180,000 in total medical expenses, $120,000 of that in the MSA could be used. Growth would reduce the contributions needed, though medical inflation may increase costs. Good health would reduce the non-premium and deductibles, leaving more MSA that might not be needed for qualified expenses. Which is not the worst problem to have, similar to asking the how much is too much to put in the MSA. Keeping receipts adds to the max, and growth assumptions vs actual add another dimension to the uncertainty along with the total receipts; more benefits with more receipts, so less incentive for healthy individuals, while those with recurrent illnesses may benefit more.

https://www.medicare.gov/your-medicare- ... lance.html

chinto
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Re: HSAs and "Saving Medical Receipts"

Postby chinto » Thu Jun 15, 2017 2:58 pm

A tip for you, scan the receipt and run it into a pdf and give it name that includes a number and then a description...

so I have: 00001_03_10_16_labTests.pdf

00001 = receipt number
03_10_16 = the date

The reason to scan it is, a lot of time the ink fades on the receipt, and for some fairly rapidly.

Then I also file the paper receipt.
I have a spreadsheet that keep a running tab.

It keeps things nice and tidy.

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Re: HSAs and "Saving Medical Receipts"

Postby gvsucavie03 » Thu Jun 15, 2017 3:43 pm

I'm currently doing $250 in reimbursements saved since 2014. I'll report back on the progress/hassle.

On first inspection, it would not be easy for my wife to do and some receipts are getting hard to read.

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dodecahedron
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Re: HSAs and "Saving Medical Receipts"

Postby dodecahedron » Thu Jun 15, 2017 4:57 pm

Artsdoctor wrote:Dodeca,

If you've been contributing to your HSA for only four years, the sums that you will withdraw are very unlikely to raise any eyebrows with the IRS. I really think that you're going to be just fine without any hiccups. With 4.75 years of family contributions and recent bull market, my HSA balances could well reach close to $50K before I stop contributing when I go on Medicare next year. If I then save receipts for decades, compounding could lead to a substantial buildup.

I'm not a CPA but there are two scenarios which, to me, would raise red flags.

The first is for people who are filing Form 8889 for the HSA withdrawal and who are simultaneously declaring medical expenses on Schedule A. There's nothing wrong with doing both, but you just can't declare the deduction AND reimburse yourself. I can see where the IRS would want to make that you understand this and haven't "double-dipped." Absolutely agree with this and since I have been itemizing large medical expenses on Schedule A during these high deductible ACA years, I am prepared to demonstrate scrupulous care not to double-dip, which will be easier if I don't save up decades worth of receipts to reimburse. Further wrinkle is that I may have a Medicare MSA account as well, so I may need to show I didn't triple dip!

The second red flag would be for extremely large withdrawals in any given year. How big? I don't know. Out-of-pocket expenses can easily be over $10,000 for someone needing medical care, but it would make me somewhat nervous taking disbursements over $50,000 in one year. You can DO it and have everything perfectly documented. But it would just make me apprehensive. Totally agree with this, so if and when I see "the end" coming, do I really want to suddenly reimburse all those accumulated saved receipts and leave my executor to deal with a huge messy audit that could delay their settling my estate?

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Artsdoctor
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Re: HSAs and "Saving Medical Receipts"

Postby Artsdoctor » Thu Jun 15, 2017 5:26 pm

Well done, Dodeca!

This is what I was alluding to above. There are really so many ways to manage an HSA--no one has a monopoly on the "right way." To make matters even more interesting, the concept of using HSAs as investment vehicles hasn't really been tested from an estate planning viewpoint. The trend in future medical insurance is probably going to be expanion of HSAs so we're going to see where this leads (the possible glitches described might have to be tested but then should be sorted out).

I have noticed a distinct change in my investment style over the past few years. I'm really trying to simplify things and I'm willing to earn less to do it. I hate to give up those expenses from 2005, but I also hate holding those ridiculous receipts as they fade away. It's a conundrum and I've started compromising byslowly reimbursing those expenses.

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Re: HSAs and "Saving Medical Receipts"

Postby tadamsmar » Fri Jun 16, 2017 12:45 pm

Trying to do an analysis of not saving the receipts.

Note that an HSA is a tax-deferred account, so it is worth keeping anyway. If you don't need to consume it.

This indicates about $300,000 in medical expenses after age 65 for a couple in 2000 dollars. That goes to 430,000 in today's dollars based on CPI growth. (but see my edit, a lot of that would be covered by insurance).

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/

So, in a 25% tax bracket, a couple could avoid more than $100,000 in taxes. You can assume that is at least $100,000 real in the future.

Of course, you have to get $400,000 worth of taxable growth in your HSA. That might be possible for younger folks who max it out.

Note that a number of HSA providers are providing an "electronic shoebox". That would be the way to go, maybe have 2 independent cloud storage sites.

Others can check my math. I am by no means sure I got it right.

Edit: Opps! I forgot about health insurance! that cuts into the qualified expenses a lot.

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Re: HSAs and "Saving Medical Receipts"

Postby *3!4!/5! » Fri Jun 16, 2017 1:33 pm

tadamsmar wrote:Note that a number of HSA providers are providing an "electronic shoebox". That would be the way to go, maybe have 2 independent cloud storage sites.

Having a real/electronic "shoebox", really doesn't address the problem of not being able to document what is needed in the first place.

Also it's really a bad idea using some HSA provider's "electronic shoebox". You need to have possession of all the information yourself. And you do not want to be "stuck" with that HSA because you don't want to leave that HSA and forfeit your "electronic shoebox". It's really just a way for HSAs to keep hold of customers, by making them more reluctant to switch HSAs. Ultimately, the HSA has zero responsibility for this info. It's totally between you and the IRS.

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Re: HSAs and "Saving Medical Receipts"

Postby 111 » Sat Jun 17, 2017 5:09 am

FIREchief wrote:You keep stating things like "often, EOBs don't exist," yet you've failed to share some meaningful examples (while multiple others have shared their ease in obtaining EOBs for most/all expenses). Sure, you're not going to get an EOB when you buy a bottle of saline solution or allowable over the counter medication, so just claim those as you go. The vast majority of legitimate medical expenses are very easy to support with EOBs and payment receipts.


My HDHP requires overseas (where I live) services to be paid out of pocket and then filed for reimbursement. Since I've never hit the high deductible I've never done this. Was that wrong? Should I have gone through the trouble of filing for reimbursement that I know I won't get just to get an EOB that shows I didn't get anything?

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Re: HSAs and "Saving Medical Receipts"

Postby Spirit Rider » Sat Jun 17, 2017 10:32 am

111 wrote:
FIREchief wrote:You keep stating things like "often, EOBs don't exist," yet you've failed to share some meaningful examples (while multiple others have shared their ease in obtaining EOBs for most/all expenses). Sure, you're not going to get an EOB when you buy a bottle of saline solution or allowable over the counter medication, so just claim those as you go. The vast majority of legitimate medical expenses are very easy to support with EOBs and payment receipts.

My HDHP requires overseas (where I live) services to be paid out of pocket and then filed for reimbursement. Since I've never hit the high deductible I've never done this. Was that wrong? Should I have gone through the trouble of filing for reimbursement that I know I won't get just to get an EOB that shows I didn't get anything?

Every single dissent I gave seen in this thread to saving receipts and deferring reimbursement in this thread are based on logical fallacies, this one is yet another non sequitur; "I don't submit my claims to my insurance, therefore no one should use this strategy.

You not taking the minimal steps to preserve your proofs, does not diminish the value of the strategy. This would be as bad as saying; "I don't say my credit card receipts, so everyone should immediately reimburse themselves from their HSA." Just like the others who take the rare exception conditions as spurious arguments to diminish the value of the entire strategy. If you think you might have difficulty in providing the minimal proof acceptable to the IRS, reimburse that one and defer the rest.

Don't sit here and come up with logical fallacy after logical fallacy to just justify what is nothing more than personal opinion. If you don't want to do it, don't do it. Just don't contort every possibility into justification of that opinion. My youngest girl would mop you guys up in a real sanctioned debate. She would make you look exceedingly foolish. Give it up guys.

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Re: HSAs and "Saving Medical Receipts"

Postby 111 » Sat Jun 17, 2017 10:46 am

Spirit Rider wrote:Every single dissent I gave seen in this thread to saving receipts and deferring reimbursement in this thread are based on logical fallacies, this one is yet another non sequitur; "I don't submit my claims to my insurance, therefore no one should use this strategy.

You not taking the minimal steps to preserve your proofs, does not diminish the value of the strategy. This would be as bad as saying; "I don't say my credit card receipts, so everyone should immediately reimburse themselves from their HSA." Just like the others who take the rare exception conditions as spurious arguments to diminish the value of the entire strategy. If you think you might have difficulty in providing the minimal proof acceptable to the IRS, reimburse that one and defer the rest.

Don't sit here and come up with logical fallacy after logical fallacy to just justify what is nothing more than personal opinion. If you don't want to do it, don't do it. Just don't contort every possibility into justification of that opinion. My youngest girl would mop you guys up in a real sanctioned debate. She would make you look exceedingly foolish. Give it up guys.


I don't immediately reimburse myself. I've just been saving receipts with plans to do it all much later.
My question is whether I should have submitted to my insurance just to get an EOB showing zero. I don't know why you are attacking me.

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Re: HSAs and "Saving Medical Receipts"

Postby Spirit Rider » Sat Jun 17, 2017 10:56 am

111 wrote:
Spirit Rider wrote:Every single dissent I gave seen in this thread to saving receipts and deferring reimbursement in this thread are based on logical fallacies, this one is yet another non sequitur; "I don't submit my claims to my insurance, therefore no one should use this strategy.

You not taking the minimal steps to preserve your proofs, does not diminish the value of the strategy. This would be as bad as saying; "I don't say my credit card receipts, so everyone should immediately reimburse themselves from their HSA." Just like the others who take the rare exception conditions as spurious arguments to diminish the value of the entire strategy. If you think you might have difficulty in providing the minimal proof acceptable to the IRS, reimburse that one and defer the rest.

Don't sit here and come up with logical fallacy after logical fallacy to just justify what is nothing more than personal opinion. If you don't want to do it, don't do it. Just don't contort every possibility into justification of that opinion. My youngest girl would mop you guys up in a real sanctioned debate. She would make you look exceedingly foolish. Give it up guys.

I don't immediately reimburse myself. I've just been saving receipts with plans to do it all much later.
My question is whether I should have submitted to my insurance just to get an EOB showing zero. I don't know why you are attacking me.

I apologize. I misunderstood your post and I was not attacking you.

I have watched this thread and a couple of members use logical fallacy after logical fallacy to try to defend their opinion. I was not attacking anyone, I was calling out the fallacy of their arguments.

Your post came along and through my lack of reading comprehension. thought you were referring to your failure to file insurance claims was a reason not to defer reimbursement.

mea culpa.

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Re: HSAs and "Saving Medical Receipts"

Postby Nate79 » Sat Jun 17, 2017 11:06 am

I save receipts, both original and scanned and stored in Google drive and backup hard drive. I keep a log in an excel sheet. I do not take medical deduction on our tax return.

I plan to let the account grow until the money is needed. I do not worry about an audit.

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Re: HSAs and "Saving Medical Receipts"

Postby ChrisC » Sat Jun 17, 2017 11:13 am

111 wrote: My question is whether I should have submitted to my insurance just to get an EOB showing zero.


Yes. It would add an extra layer of documentation, not that the extra layer is necessary but it could be helpful. I have submitted out-of-network provider claims to my HDHP even though the claims fall very short of the deductible. My dentists submit claims to my primary dental insurance and then to my HDHP which has some basic secondary dental insurance coverage -- they don't have to submit to the secondary but all of this might be helpful from a documentation standpoint. The EOB from the HDHP for dental coverage almost always shows zero but I was surprised by the last submission where they covered something for $28. You never know what the HDHP might cover unless you submit it to them.

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Re: HSAs and "Saving Medical Receipts"

Postby *3!4!/5! » Sat Jun 17, 2017 12:57 pm

Spirit Rider wrote:
111 wrote:
FIREchief wrote:You keep stating things like "often, EOBs don't exist," yet you've failed to share some meaningful examples (while multiple others have shared their ease in obtaining EOBs for most/all expenses). Sure, you're not going to get an EOB when you buy a bottle of saline solution or allowable over the counter medication, so just claim those as you go. The vast majority of legitimate medical expenses are very easy to support with EOBs and payment receipts.

My HDHP requires overseas (where I live) services to be paid out of pocket and then filed for reimbursement. Since I've never hit the high deductible I've never done this. Was that wrong? Should I have gone through the trouble of filing for reimbursement that I know I won't get just to get an EOB that shows I didn't get anything?

Every single dissent I gave seen in this thread to saving receipts and deferring reimbursement in this thread are based on logical fallacies, this one is yet another non sequitur; "I don't submit my claims to my insurance, therefore no one should use this strategy.

You not taking the minimal steps to preserve your proofs, does not diminish the value of the strategy. This would be as bad as saying; "I don't say my credit card receipts, so everyone should immediately reimburse themselves from their HSA." Just like the others who take the rare exception conditions as spurious arguments to diminish the value of the entire strategy. If you think you might have difficulty in providing the minimal proof acceptable to the IRS, reimburse that one and defer the rest.

Don't sit here and come up with logical fallacy after logical fallacy to just justify what is nothing more than personal opinion. If you don't want to do it, don't do it. Just don't contort every possibility into justification of that opinion. My youngest girl would mop you guys up in a real sanctioned debate. She would make you look exceedingly foolish. Give it up guys.


The contention was between those who say "Everybody always gets an EOB" and those who say "Somebody sometimes doesn't get an EOB". The positions are extremely asymmetrical.

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Re: HSAs and "Saving Medical Receipts"

Postby tadamsmar » Sat Jun 17, 2017 6:49 pm

I used to have my dentist submit my bills to my medical insurance just to get the EOB with zero on it. I did it because the EOBs were then online at my insurer's web site for 18 months and I liked having a more complete record there. I could download them in bulk once a year for my records.

Lo and behold, my medical insurance paid a good chunk of my 6 month check ups! I could never find anything in the list of benefits that said that I got this.

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Re: HSAs and "Saving Medical Receipts"

Postby FIREchief » Sat Jun 17, 2017 7:50 pm

*3!4!/5! wrote:
The contention was between those who say "Everybody always gets an EOB" and those who say "Somebody sometimes doesn't get an EOB". The positions are extremely asymmetrical.


I searched the entire thread and was unable to find any of the posts from those who say "Everybody always gets an EOB." Were they deleted? :confused

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Re: HSAs and "Saving Medical Receipts"

Postby inbox788 » Sun Jun 18, 2017 12:30 pm

tadamsmar wrote:I used to have my dentist submit my bills to my medical insurance just to get the EOB with zero on it. I did it because the EOBs were then online at my insurer's web site for 18 months and I liked having a more complete record there. I could download them in bulk once a year for my records.

Lo and behold, my medical insurance paid a good chunk of my 6 month check ups! I could never find anything in the list of benefits that said that I got this.

You've either got an unusually good insurance or possibly it might be a mistake. The dentist, coding or programming could be letting these charges get paid incorrectly, and one day when it's suddenly corrected, could disappear or worse they may try to clawback. I'd look for the fine print that confirms your benefit or be prepared to deal with issues down the road, which are made even more complicated if HSA funds get involved.

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Re: HSAs and "Saving Medical Receipts"

Postby tadamsmar » Sun Jun 18, 2017 4:02 pm

inbox788 wrote:
tadamsmar wrote:I used to have my dentist submit my bills to my medical insurance just to get the EOB with zero on it. I did it because the EOBs were then online at my insurer's web site for 18 months and I liked having a more complete record there. I could download them in bulk once a year for my records.

Lo and behold, my medical insurance paid a good chunk of my 6 month check ups! I could never find anything in the list of benefits that said that I got this.

You've either got an unusually good insurance or possibly it might be a mistake. The dentist, coding or programming could be letting these charges get paid incorrectly, and one day when it's suddenly corrected, could disappear or worse they may try to clawback. I'd look for the fine print that confirms your benefit or be prepared to deal with issues down the road, which are made even more complicated if HSA funds get involved.


You got me worried. I looked again, and it does provide some preventive dental services.

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Re: HSAs and "Saving Medical Receipts"

Postby 523HRR » Wed Jun 21, 2017 9:50 am

My HSA is currently worth ~$77K on cumulative contributions of ~$51K since 2010. It's not really a big deal for me to save down EOBs, itemized provider invoices, and tax returns. I appreciate the tax-free growth of the HSA and plan to just let it ride into retirement. Not that concerned with an IRS audit.

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Re: HSAs and "Saving Medical Receipts"

Postby gvsucavie03 » Wed Jun 21, 2017 11:56 am

gvsucavie03 wrote:I'm currently doing $250 in reimbursements saved since 2014. I'll report back on the progress/hassle.

On first inspection, it would not be easy for my wife to do and some receipts are getting hard to read.


Done. $250 back, just had to wait a few days to verify my checking account. Again, if my wife had to do this on her own, I don't think she would/could.

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Re: HSAs and "Saving Medical Receipts"

Postby Artsdoctor » Wed Jun 21, 2017 12:29 pm

gvsucavie03 wrote:
gvsucavie03 wrote:I'm currently doing $250 in reimbursements saved since 2014. I'll report back on the progress/hassle.

On first inspection, it would not be easy for my wife to do and some receipts are getting hard to read.


Done. $250 back, just had to wait a few days to verify my checking account. Again, if my wife had to do this on her own, I don't think she would/could.


If some of your receipts are getting hard to read, scan them. You'll still need to hang on to them even after you receive the reimbursement. The IRS recommends that you keep the receipts for three years from the time of filing your tax return (for example, you're receiving your reimbursements this year, that will be declared on your 2018 return, and you'll the receipts until the end of 2021).

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Re: HSAs and "Saving Medical Receipts"

Postby gvsucavie03 » Wed Jun 21, 2017 1:30 pm

Artsdoctor wrote:
gvsucavie03 wrote:
gvsucavie03 wrote:I'm currently doing $250 in reimbursements saved since 2014. I'll report back on the progress/hassle.

On first inspection, it would not be easy for my wife to do and some receipts are getting hard to read.


Done. $250 back, just had to wait a few days to verify my checking account. Again, if my wife had to do this on her own, I don't think she would/could.


If some of your receipts are getting hard to read, scan them. You'll still need to hang on to them even after you receive the reimbursement. The IRS recommends that you keep the receipts for three years from the time of filing your tax return (for example, you're receiving your reimbursements this year, that will be declared on your 2018 return, and you'll the receipts until the end of 2021).


Yes, I kept them, but I transferred them from my "save to be reimbursed" file to my 2017 Taxes file. I also marked and dated them. I don't think they'll become completely unreadable in 3 years, even then, they are saved now in my Health Equity account online if it becomes less readable - I'll be able to figure out which is which based on the data I entered.

The point of my post was to support the argument that yes, it is fairly easy for the nerdier spouse to get the reimbursements, but will be very complicated for the surviving, non-nerdy spouse to figure out a complicated financial system if left "to be reimbursed in retirement."

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Re: HSAs and "Saving Medical Receipts"

Postby Artsdoctor » Wed Jun 21, 2017 3:52 pm

^ There is always a risk that the spouse left behind will not be able to follow through with some of the financial plans that the Boglehead was planning. This is where your IPS or any other written instructions would come into play. I've tried to be focused and as brief as possible with those instructions and if it's still too difficult, the accountant and/or Vanguard can help. For the HSAs, I have each year's receipts with a tally that can be reimbursed: the amount and clear instructions are with each packet.

There will always be a balancing act between doing what's best financially and keeping things as simple as possible. At some point you (me) realize that giving up a few bucks in order to keep things simple and centralized is preferable--at least for us.

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Re: HSAs and "Saving Medical Receipts"

Postby jebmke » Wed Jun 21, 2017 4:43 pm

Artsdoctor wrote:There will always be a balancing act between doing what's best financially and keeping things as simple as possible. At some point you (me) realize that giving up a few bucks in order to keep things simple and centralized is preferable--at least for us.

These financial tasks also have to be taken in the whole context of everything that the spouse will face, not just financial. I have assisted widows and widowers with tax filings and they often talk about many things that they are facing after the death of their spouse - not just financial. These conversations reinforce my lean toward simplification whenever possible even when the thing I am looking at, in and of itself isn't that big a deal.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: HSAs and "Saving Medical Receipts"

Postby FIREchief » Sun Jun 25, 2017 5:06 am

outdoorsygal wrote:You cannot use the HSA to pay premiums for Medicare Supplement Policies



Apparently there are exceptions, including for employer sponsored supplements.

viewtopic.php?f=2&t=220853&p=3406522#p3406522

outdoorsygal wrote:Otherwise at age 66, you do not pay the 10% penalty for withdrawing money for non medical issues.

You just pay the regular income tax on those withdrawls.


I thought it was a 20% penalty that ends at age 65.

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Re: HSAs and "Saving Medical Receipts"

Postby Artsdoctor » Sun Jun 25, 2017 9:03 am

"There is no additional tax on distributions made after the date you are disabled, reach age 65, or die."

This is from Publication 969 which describes tax penalties for money withdrawn for non-medical expense reasons. If withdrawing money from your HSA after reaching the age of 65 for non-medical expense reasons, you'd pay income tax rates (just like from an IRA).


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