HSA question

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Ciel
Posts: 119
Joined: Thu Jun 27, 2013 11:14 pm

HSA question

Post by Ciel »

Consider the following scenario:

An individual is covered by a high-deductible health plan with an HSA. The plan does not cover a procedure that a physician has determined is medically indicated. The individual pays cash for the procedure.

Can funds from the HSA be used to reimburse the individual for this procedure, both in the year the procedure was performed and in subsequent years up to the amount of the cash price paid? For example, if the procedure costs 10k, and the HSA balance is 7k, can 7k be withdrawn right away, and another 3k the year after it was performed (after the HSA has been funded for that subsequent year)? Although the individual was covered by a HDHP and enrolled in an HSA at the time of the procedure, it was not processed through insurance.
Billionaire
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Re: HSA question

Post by Billionaire »

Yes. I asked the same question to our HR department. As an aside, I assume when you say paying in cash, you mean by check or credit card. Correct?
asif408
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Re: HSA question

Post by asif408 »

My understanding is that you can use HSA funds you save while under the insurance even once you are no longer covered by the insurance later on. The only requirement limitation is that you can only open and fund an HSA while you have a HDHP. The eligibility for HSA expenses is determined by the IRS (https://www.irs.gov/pub/irs-pdf/p502.pdf) and appears to be detached from actually having insurance. So as long as you have enough funds in the HSA at the time you need to reimburse yourself, your insurance status or coverage for specific procedures doesn't seem to matter.
ved
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Re: HSA question

Post by ved »

I suggest you still process this through insurance. The insurance may not cover it, but may have negotiated rates that could probably decrease the amount owed. Also, this amount may be included in the deductible bucket.
Topic Author
Ciel
Posts: 119
Joined: Thu Jun 27, 2013 11:14 pm

Re: HSA question

Post by Ciel »

Can anyone confirm this part, given this is an IRS-eligible HSA expense:
For example, if the procedure costs 10k, and the HSA balance is 7k, can 7k be withdrawn right away, and another 3k the year after it was performed (after the HSA has been funded for that subsequent year)?
Most of the information I've found online seems to indicate that this is allowed but I wanted to make sure I'm not missing anything.

Thanks for the replies.
soccerrules
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Re: HSA question

Post by soccerrules »

Ciel wrote: Fri Oct 20, 2017 12:47 pm Can anyone confirm this part, given this is an IRS-eligible HSA expense:
For example, if the procedure costs 10k, and the HSA balance is 7k, can 7k be withdrawn right away, and another 3k the year after it was performed (after the HSA has been funded for that subsequent year)?
Thanks for the replies.
I would ask your benefits administrator. I have an HDHP/HSA and I have different requirements and provisions than others on this board. They should be able to answer your question.

I believe with HSA withdrawals, you can only withdraw what is in the account at the time of withdrawal. In your scenario I believe you can take the $7K now, if $7K is in the account today. Then assuming after Jan 15 the next year, you can withdrawal that contribution and then do the same at each future contribution (pay period) until you have hit the $3K.
Don't let your outflow exceed your income or your upkeep will be your downfall.
an_asker
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Re: HSA question

Post by an_asker »

Ciel wrote: Fri Oct 20, 2017 12:47 pm Can anyone confirm this part, given this is an IRS-eligible HSA expense:
For example, if the procedure costs 10k, and the HSA balance is 7k, can 7k be withdrawn right away, and another 3k the year after it was performed (after the HSA has been funded for that subsequent year)?
Most of the information I've found online seems to indicate that this is allowed but I wanted to make sure I'm not missing anything.

Thanks for the replies.
That is correct, per majority of Boglehead responses to previous threads.
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southerndoc
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Re: HSA question

Post by southerndoc »

asif408 wrote: Fri Oct 20, 2017 7:48 am My understanding is that you can use HSA funds you save while under the insurance even once you are no longer covered by the insurance later on. The only requirement limitation is that you can only open and fund an HSA while you have a HDHP. The eligibility for HSA expenses is determined by the IRS (https://www.irs.gov/pub/irs-pdf/p502.pdf) and appears to be detached from actually having insurance. So as long as you have enough funds in the HSA at the time you need to reimburse yourself, your insurance status or coverage for specific procedures doesn't seem to matter.
I think you can open an HSA without a HDHP, but you can't fund it. A situation where this might occur is if you no longer have a HDHP and want to transfer your HSA from one custodian to a new custodian.
asif408
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Location: Florida

Re: HSA question

Post by asif408 »

southerndoc wrote: Fri Oct 20, 2017 4:20 pm
asif408 wrote: Fri Oct 20, 2017 7:48 am My understanding is that you can use HSA funds you save while under the insurance even once you are no longer covered by the insurance later on. The only requirement limitation is that you can only open and fund an HSA while you have a HDHP. The eligibility for HSA expenses is determined by the IRS (https://www.irs.gov/pub/irs-pdf/p502.pdf) and appears to be detached from actually having insurance. So as long as you have enough funds in the HSA at the time you need to reimburse yourself, your insurance status or coverage for specific procedures doesn't seem to matter.
I think you can open an HSA without a HDHP, but you can't fund it. A situation where this might occur is if you no longer have a HDHP and want to transfer your HSA from one custodian to a new custodian.
Good point, never thought of that.
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