Why save HSA receipts?

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Thorsbane
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Why save HSA receipts?

Post by Thorsbane »

I'm confused by some common advice regarding HSAs. Currently max out, recently started paying medical activity out of pocket rather than through HSA. Plan to continue to max out and only use in retirement. I often see people save receipts, but I'm not clear on why... When I'm in my senior years, can I use prior years' receipts to draw funds from my HSA and bring into my taxable accounts? Why would I do this if the investment income and realized gains continue to be tax free?
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anon_investor
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Re: Why save HSA receipts?

Post by anon_investor »

Under the current law, there is no deadline to claim medical expenses for HSA reimbursement. So in 2050, you could theoretically use a 2019 receipt for a $500 medical bill and pull out $500 tax/penalty free (meanwhile over the 31 years that $500 you never took out likely grew a lot). But who knows whether the law will allow this in 2050? But keeping the receipts, allows the HSA to function as an emergency fund for non medical expenses, or as a retirement account later if you do not have enough medical expenses in retirement to use up the HSA (if you happen to be that healthy); money that was NEVER taxed!
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sk2101
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Re: Why save HSA receipts?

Post by sk2101 »

There is no time limit on when you reimburse yourself from the HSA, so in theory you can let the funds there and get a reimbursement later on... To me seems to much trouble.

The reason most people save receipts is because they are paying expenses as they go from the HSA. I have been examined by the IRS and had to send the receipts and Inam glad I was able to produce them all so no issues came out of that. I would never risk waiting years and then do a big withdrawal, it would be like asking for an audit.
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anon_investor
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Re: Why save HSA receipts?

Post by anon_investor »

sk2101 wrote: Fri Jul 26, 2019 12:01 pm I would never risk waiting years and then do a big withdrawal, it would be like asking for an audit.
I agree with this.

I am personally saving receipts in the event I have some catastrophic non medical emergency and need money. Then I at least have the fall back option to claim all those expenses and get some cash. If I get audited, so be it, but I only plan to do this for a real emergency. I figure I will have enough medical expenses in retirement to use up any HSA money I have.
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Svensk Anga
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Re: Why save HSA receipts?

Post by Svensk Anga »

You ought to plan on drawing down the HSA during your (and your spouse's) lifetime. The whole thing is taxable if it goes to a non-spouse heir.
TropikThunder
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Re: Why save HSA receipts?

Post by TropikThunder »

Thorsbane wrote: Fri Jul 26, 2019 11:51 am Why would I do this if the investment income and realized gains continue to be tax free?
Do you not plan on ever withdrawing the money?
runner3081
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Re: Why save HSA receipts?

Post by runner3081 »

anon_investor wrote: Fri Jul 26, 2019 12:04 pm
sk2101 wrote: Fri Jul 26, 2019 12:01 pm I would never risk waiting years and then do a big withdrawal, it would be like asking for an audit.
I agree with this.

I am personally saving receipts in the event I have some catastrophic non medical emergency and need money. Then I at least have the fall back option to claim all those expenses and get some cash. If I get audited, so be it, but I only plan to do this for a real emergency. I figure I will have enough medical expenses in retirement to use up any HSA money I have.
Audits for this don't worry me, I would have all the receipts and verify amounts prior to pulling the funds out.

We have about 8k in receipts from a few years:
1) Scanned and saved on local computer
2) Saved on the cloud
3) Hard copy on-site

I wouldn't hesitate to pull any amount at anytime, with receipts.
international001
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Re: Why save HSA receipts?

Post by international001 »

I save receipts even if I use HSA to pay current medical expenses. IRS may ask regardless.

IMO, postponing HSA expenses to after retirement is stupid in most situations.
miamivice
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Re: Why save HSA receipts?

Post by miamivice »

international001 wrote: Fri Jul 26, 2019 1:05 pm IMO, postponing HSA expenses to after retirement is stupid in most situations.
Why do you say that? It grows tax free and is invested in the stock market. We put in more than we can take out each year (about double). It's just more tax advantaged space, but the HSA is the only space that is triple tax advantaged.
jebmke
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Re: Why save HSA receipts?

Post by jebmke »

I am also (technically) a senior. I saved receipts for a while and then decided to cash them in and do annual reimbursements after that. I didn't want this file of paper and work left behind for my spouse -- she'd stomp on my ashes -- or for me to deal with later in life. It just isn't that big a deal for us.

I did get audited on my form 8889 for the year we cashed out and the subsequent year. Nothing since.

To save on the paperwork, I get annual reports from the pharmacy and our regular doctors and dentist provide me with an annual statement each year showing all the charges and the zero balance due. Don't forget to save Medicare Part B and D invoices if you are still saving paper.
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anon_investor
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Re: Why save HSA receipts?

Post by anon_investor »

international001 wrote: Fri Jul 26, 2019 1:05 pm IMO, postponing HSA expenses to after retirement is stupid in most situations.
For super savers who are already maxing out all of their tax advantaged space (e.g. 401k, IRA, etc.) it makes sense to use an HSA as an additional place to save money. Not only can you always withdraw tax free for qualified medical expenses, but you can also withdraw funds for any reason at age 65+ and pay ordinary income rates (not subject to 20% tax penalty), effectively making it like a traditional IRA.
harvestbook
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Re: Why save HSA receipts?

Post by harvestbook »

miamivice wrote: Fri Jul 26, 2019 1:12 pm
international001 wrote: Fri Jul 26, 2019 1:05 pm IMO, postponing HSA expenses to after retirement is stupid in most situations.
Why do you say that? It grows tax free and is invested in the stock market. We put in more than we can take out each year (about double). It's just more tax advantaged space, but the HSA is the only space that is triple tax advantaged.
We have to really push to max out our tax-advantaged space, so using the HSA for current expenses basically gives us twice the current-year tax break--we deduct the HSA contribution, and then when we reimburse, we have more money to put in IRA or solo 401K. This is especially helpful since we just started ACA health insurance this year, so we have more flexibility. While most of our HSA is invested in the market for the long term, we maintain a "current-use HSA" that we put in a few thousand every year at the local credit union, paying 2.5 percent.

I wouldn't call it "stupid" to use or not use the HSA for current medical expenses, since everyone's situation is different and there's no hard-and-fast rule. But certainly it is wise to save receipts either way.
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FIREchief
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Re: Why save HSA receipts?

Post by FIREchief »

sk2101 wrote: Fri Jul 26, 2019 12:01 pm There is no time limit on when you reimburse yourself from the HSA, so in theory you can let the funds there and get a reimbursement later on... To me seems to much trouble.

The reason most people save receipts is because they are paying expenses as they go from the HSA. I have been examined by the IRS and had to send the receipts and Inam glad I was able to produce them all so no issues came out of that. I would never risk waiting years and then do a big withdrawal, it would be like asking for an audit.
jebmke wrote: Fri Jul 26, 2019 1:23 pm I am also (technically) a senior. I saved receipts for a while and then decided to cash them in and do annual reimbursements after that. I didn't want this file of paper and work left behind for my spouse -- she'd stomp on my ashes -- or for me to deal with later in life. It just isn't that big a deal for us.

I did get audited on my form 8889 for the year we cashed out and the subsequent year. Nothing since.

To save on the paperwork, I get annual reports from the pharmacy and our regular doctors and dentist provide me with an annual statement each year showing all the charges and the zero balance due. Don't forget to save Medicare Part B and D invoices if you are still saving paper.
Would you folks be willing to share with us the ballpark amount that triggered the IRS's review? $5K? $10K? $15K?

jebmke: I do recall somebody previously reporting an audit for a bit over $10K. Was that you?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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TomatoTomahto
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Re: Why save HSA receipts?

Post by TomatoTomahto »

It seemed like a PITA, but I decided to keep our HSA active and not use it to pay for current medical expenses.

Our HSA has an option to flag qualified expenses and save them. Does anyone else use this feature rather than keeping copies of receipts?

At worst, our heirs will have to pay ordinary income taxes on the remaining balance after years of tax free growth.
I get the FI part but not the RE part of FIRE.
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FIREchief
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Re: Why save HSA receipts?

Post by FIREchief »

Thorsbane wrote: Fri Jul 26, 2019 11:51 am Why would I do this if the investment income and realized gains continue to be tax free?
One clear scenario: You're fifty years old and despite earning $$$, they're all needed to pay for college costs, mortgage, etc. If you have the receipts, you can pull money out of the HSA to fund your Roth. Zero tax cost and Roth dollars are much more desirable later in life than HSA dollars.

A second scenario: You're 65 years old, deferring SS until 70, and drawing down your large tIRA for living expenses and Roth conversions. Each qualified expense dollar you take out of your HSA to pay for living expenses results in one more dollar going from your tIRA to Roth for the same tax cost. Again, Roth dollars are more valuable than HSA dollars.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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oldcomputerguy
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Re: Why save HSA receipts?

Post by oldcomputerguy »

I scan and save all invoices from medical providers, and keep records of payment of those invoices; plus I keep records of any time I tap the HSA for reimbursement of those payments. I want to be able to prove that the money spent from my HSA went for legitimate, qualifying medical expenses just in case the IRS comes calling at the door.
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PeterParker
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Re: Why save HSA receipts?

Post by PeterParker »

Real talk:

Probably no need to save any receipts until you hit $10k on the HSA. Since you can easily spend that down in retirement for medical. Also keep in mind you may not ALWAYS be in a HDHP depending on life circumstances to contribute.

The name of the game of the HSA is the larget possible tax avoidance.
Using it as a tIRA, while possible, is a failure because you're incurring needless taxes.

In my view you really have 3 strategies here:

1. Blow through major medical expenses with the HSA as they happen. Pro: No receipt BS (any IRS audit would be within the requirements of your banks to retain the records, as your insurance company where applicable). Cons: Lack of maximal tax-free growth.

2. Save every little receipt, have a drawer full of paper, or scan stuff to the cloud. Pros: Maximal tax-free growth and lowest risk of not drawing down HSA fully in retirement. Cons: Wasting hours of your valuable time and mental space at $X/ hour on being a receipt pack-rat. Probably being REAL nervous when you're claiming a withdrawal for contact lenses from 1992 and hoping it holds up somehow.

3. Happy medium. Build the HSA and don't care about receipts. Once it gets to maybe $15,000 or $20,000 --- or even more --- start blowing through it age 50 (draw out medical from it as they happen) or even 60. Maybe only keep receipts over $1,000 as Aces in the hole from age 30, otherwise don't bother. Depends on your balance + anticipated medical expenses. Some claim you can use HSA funds on assisted living facilities, but are you going to age "hoping" to go to a nursing home and get cancer? Of course not. If you realize 100% of the tax benefit and 90% of the growth potential, you've done good.
Big Dog
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Re: Why save HSA receipts?

Post by Big Dog »

HSA can also be used to reimburse yourself for Medicare premiums (which is what I plan to do).
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Re: Why save HSA receipts?

Post by jebmke »

FIREchief wrote: Fri Jul 26, 2019 1:40 pm Would you folks be willing to share with us the ballpark amount that triggered the IRS's review? $5K? $10K? $15K?

jebmke: I do recall somebody previously reporting an audit for a bit over $10K. Was that you?
My recollection is that it was in the range of $30-35K for the flush year. The following year was normal - not sure why they came back a second time.
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Nate79
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Re: Why save HSA receipts?

Post by Nate79 »

Saving the receipts (using an excel sheet and pdf scan stored in online storage) is an excellent way to have great flexibility in the future to take out money tax free just like Roth money. Of course you may have medical costs in retirement as well but the ability to pull out money tax free can help control income levels for tax rates or other income manipulation.
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FIREchief
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Re: Why save HSA receipts?

Post by FIREchief »

jebmke wrote: Fri Jul 26, 2019 2:37 pm
FIREchief wrote: Fri Jul 26, 2019 1:40 pm Would you folks be willing to share with us the ballpark amount that triggered the IRS's review? $5K? $10K? $15K?

jebmke: I do recall somebody previously reporting an audit for a bit over $10K. Was that you?
My recollection is that it was in the range of $30-35K for the flush year. The following year was normal - not sure why they came back a second time.
Thanks. This is helpful. I've never exceeded $10K and I've yet to hear anything from the IRS. I'm guessing that the overall magnitude of the qualified withdrawals would be the most/only significant variable in their eyes. I'm well prepared for such an inquiry (probably over-prepared), but the thought of printing and mailing a hundred pages of scanned backup does not appeal to me.

I've been allowing a one to two year lag between expenditure and reimbursement. My reasoning is that if I've misplace the backup, or the IRS won't accept it, I should be able to pull another non-reimbursed expenditure off the stack as a replacement (i.e. an expense that occurred before my withdrawal but had not been previously reported as a qualified withdrawal). In fact, if they asked me for backup for a $10K withdrawal, I might just send them $11K worth of receipts to be on the safe side.

Another note to the readers. In addition to Medicare premiums, HSA funds can also be withdrawn tax free to pay for COBRA insurance premiums. This can be useful if somebody chooses to FIRE at age 63.5 and to use COBRA to bridge health care coverage until Medicare. (see my signature)
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theplayer11
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Re: Why save HSA receipts?

Post by theplayer11 »

PeterParker wrote: Fri Jul 26, 2019 2:18 pm Real talk:

Probably no need to save any receipts until you hit $10k on the HSA. Since you can easily spend that down in retirement for medical. Also keep in mind you may not ALWAYS be in a HDHP depending on life circumstances to contribute.

The name of the game of the HSA is the larget possible tax avoidance.
Using it as a tIRA, while possible, is a failure because you're incurring needless taxes.

In my view you really have 3 strategies here:

1. Blow through major medical expenses with the HSA as they happen. Pro: No receipt BS (any IRS audit would be within the requirements of your banks to retain the records, as your insurance company where applicable). Cons: Lack of maximal tax-free growth.

2. Save every little receipt, have a drawer full of paper, or scan stuff to the cloud. Pros: Maximal tax-free growth and lowest risk of not drawing down HSA fully in retirement. Cons: Wasting hours of your valuable time and mental space at $X/ hour on being a receipt pack-rat. Probably being REAL nervous when you're claiming a withdrawal for contact lenses from 1992 and hoping it holds up somehow.

3. Happy medium. Build the HSA and don't care about receipts. Once it gets to maybe $15,000 or $20,000 --- or even more --- start blowing through it age 50 (draw out medical from it as they happen) or even 60. Maybe only keep receipts over $1,000 as Aces in the hole from age 30, otherwise don't bother. Depends on your balance + anticipated medical expenses. Some claim you can use HSA funds on assisted living facilities, but are you going to age "hoping" to go to a nursing home and get cancer? Of course not. If you realize 100% of the tax benefit and 90% of the growth potential, you've done good.
not sure why you would want to blow through it at age 50. I'm not naive enough to think that medical problems will not happen to either myself, spouse or both. I'm contributing the max every year and will let it grow as large as possible. Worst case(or actually best case), we won't need it and then it's basically an IRA to withdraw or gets passed to our kids..not tax free, but don't care at that point.
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Re: Why save HSA receipts?

Post by PeterParker »

theplayer11 wrote: Fri Jul 26, 2019 3:06 pm
PeterParker wrote: Fri Jul 26, 2019 2:18 pm Real talk:

Probably no need to save any receipts until you hit $10k on the HSA. Since you can easily spend that down in retirement for medical. Also keep in mind you may not ALWAYS be in a HDHP depending on life circumstances to contribute.

The name of the game of the HSA is the larget possible tax avoidance.
Using it as a tIRA, while possible, is a failure because you're incurring needless taxes.

In my view you really have 3 strategies here:

1. Blow through major medical expenses with the HSA as they happen. Pro: No receipt BS (any IRS audit would be within the requirements of your banks to retain the records, as your insurance company where applicable). Cons: Lack of maximal tax-free growth.

2. Save every little receipt, have a drawer full of paper, or scan stuff to the cloud. Pros: Maximal tax-free growth and lowest risk of not drawing down HSA fully in retirement. Cons: Wasting hours of your valuable time and mental space at $X/ hour on being a receipt pack-rat. Probably being REAL nervous when you're claiming a withdrawal for contact lenses from 1992 and hoping it holds up somehow.

3. Happy medium. Build the HSA and don't care about receipts. Once it gets to maybe $15,000 or $20,000 --- or even more --- start blowing through it age 50 (draw out medical from it as they happen) or even 60. Maybe only keep receipts over $1,000 as Aces in the hole from age 30, otherwise don't bother. Depends on your balance + anticipated medical expenses. Some claim you can use HSA funds on assisted living facilities, but are you going to age "hoping" to go to a nursing home and get cancer? Of course not. If you realize 100% of the tax benefit and 90% of the growth potential, you've done good.
not sure why you would want to blow through it at age 50. I'm not naive enough to think that medical problems will not happen to either myself, spouse or both. I'm contributing the max every year and will let it grow as large as possible. Worst case(or actually best case), we won't need it and then it's basically an IRA to withdraw or gets passed to our kids..not tax free, but don't care at that point.
Well the risk is being in a situation where --- a fortunate situation -- where you cannot blow through your HSA on pure medical costs.

My Dad is retired and 61 years old. He pays stupid little for medical insurance on an Obamacare Silver plan. Something like $20 a month with a $700 deductible after subsidies. If you have $40k in your HSA -- you wouldn't be able to blow through it all by age 100, unless something changes with your plan. An unlikely and fortunate scenario, but yea.

Also keep in mind. If you drain $2,000 from your HSA, that frees up more money to put towards your 401k limit, or even a taxable account. You already FULLY REALIZED the tax in, tax out benefit from the HSA, you are only changing "taxes on growth" of amount withdrawn.

So you're realizing essentially 95% of the lifetime potential benefit. Not as big a deal as you think. That $2,000 --- if it grows at 8%, that's 160 that you're saving 25% on .... that's another $40 a year. Though if you throw that cash-flow into a 401k, you're minimizing even that difference.


To your point ----
"Blowing" through the HSA early (starting at 50) vs. "dying" with $40k in an HSA.

Assuming your other expenses were the same (you just paid medical with taxable in the latter case) --- the former will have more money to pass onto his kids. Because he paid less taxes overall.
theplayer11
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Re: Why save HSA receipts?

Post by theplayer11 »

PeterParker wrote: Fri Jul 26, 2019 3:19 pm
theplayer11 wrote: Fri Jul 26, 2019 3:06 pm
PeterParker wrote: Fri Jul 26, 2019 2:18 pm Real talk:

Probably no need to save any receipts until you hit $10k on the HSA. Since you can easily spend that down in retirement for medical. Also keep in mind you may not ALWAYS be in a HDHP depending on life circumstances to contribute.

The name of the game of the HSA is the larget possible tax avoidance.
Using it as a tIRA, while possible, is a failure because you're incurring needless taxes.

In my view you really have 3 strategies here:

1. Blow through major medical expenses with the HSA as they happen. Pro: No receipt BS (any IRS audit would be within the requirements of your banks to retain the records, as your insurance company where applicable). Cons: Lack of maximal tax-free growth.

2. Save every little receipt, have a drawer full of paper, or scan stuff to the cloud. Pros: Maximal tax-free growth and lowest risk of not drawing down HSA fully in retirement. Cons: Wasting hours of your valuable time and mental space at $X/ hour on being a receipt pack-rat. Probably being REAL nervous when you're claiming a withdrawal for contact lenses from 1992 and hoping it holds up somehow.

3. Happy medium. Build the HSA and don't care about receipts. Once it gets to maybe $15,000 or $20,000 --- or even more --- start blowing through it age 50 (draw out medical from it as they happen) or even 60. Maybe only keep receipts over $1,000 as Aces in the hole from age 30, otherwise don't bother. Depends on your balance + anticipated medical expenses. Some claim you can use HSA funds on assisted living facilities, but are you going to age "hoping" to go to a nursing home and get cancer? Of course not. If you realize 100% of the tax benefit and 90% of the growth potential, you've done good.
not sure why you would want to blow through it at age 50. I'm not naive enough to think that medical problems will not happen to either myself, spouse or both. I'm contributing the max every year and will let it grow as large as possible. Worst case(or actually best case), we won't need it and then it's basically an IRA to withdraw or gets passed to our kids..not tax free, but don't care at that point.
Well the risk is being in a situation where --- a fortunate situation -- where you cannot blow through your HSA on pure medical costs.

My Dad is retired and 61 years old. He pays stupid little for medical insurance on an Obamacare Silver plan. Something like $20 a month with a $700 deductible after subsidies. If you have $40k in your HSA -- you wouldn't be able to blow through it all by age 100, unless something changes with your plan. An unlikely and fortunate scenario, but yea.

Also keep in mind. If you drain $2,000 from your HSA, that frees up more money to put towards your 401k limit, or even a taxable account. You already FULLY REALIZED the tax in, tax out benefit from the HSA, you are only changing "taxes on growth" of amount withdrawn.

So you're realizing essentially 95% of the lifetime potential benefit. Not as big a deal as you think. That $2,000 --- if it grows at 8%, that's 160 that you're saving 25% on .... that's another $40 a year. Though if you throw that cash-flow into a 401k, you're minimizing even that difference.


To your point ----
"Blowing" through the HSA early (starting at 50) vs. "dying" with $40k in an HSA.

Assuming your other expenses were the same (you just paid medical with taxable in the latter case) --- the former will have more money to pass onto his kids. Because he paid less taxes overall.
or pay Part B or D Medicare premiums
Bacchus01
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Re: Why save HSA receipts?

Post by Bacchus01 »

It gives you flexibility later in life you might not otherwise have and can help avoid or eliminate taxes.
international001
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Re: Why save HSA receipts?

Post by international001 »

miamivice wrote: Fri Jul 26, 2019 1:12 pm
international001 wrote: Fri Jul 26, 2019 1:05 pm IMO, postponing HSA expenses to after retirement is stupid in most situations.
Why do you say that? It grows tax free and is invested in the stock market. We put in more than we can take out each year (about double). It's just more tax advantaged space, but the HSA is the only space that is triple tax advantaged.
Because there are ways more efficient to growth retirement funds. 401k, mega(backdoor) Roths. If you are already maxing out there (~$60k) then fine, you can add up the extra ~$3k of HSA. Otherwise, it's better to just use your HSA today, and add some extra to the Roth.

Disclaimer: I'm currently maxing with megabackdoor Roths, but it may not do it in the future. For me, it's not worth the hassle of keeping receipts.
international001
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Re: Why save HSA receipts?

Post by international001 »

anon_investor wrote: Fri Jul 26, 2019 1:26 pm
international001 wrote: Fri Jul 26, 2019 1:05 pm IMO, postponing HSA expenses to after retirement is stupid in most situations.
For super savers who are already maxing out all of their tax advantaged space (e.g. 401k, IRA, etc.) it makes sense to use an HSA as an additional place to save money. Not only can you always withdraw tax free for qualified medical expenses, but you can also withdraw funds for any reason at age 65+ and pay ordinary income rates (not subject to 20% tax penalty), effectively making it like a traditional IRA.
Right... but better to spend $1k in HSA and use an extra $1k in your Roth than just deferring that $1k expending for 20 years (if you have Roth space, of course)

If you can add your tax-sheltered space a ~5% and it's worth the trouble, go ahead. You also have to consider the risks than with 20 years laws change and you are not able to claim an old receipt
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anon_investor
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Re: Why save HSA receipts?

Post by anon_investor »

international001 wrote: Sat Jul 27, 2019 6:32 pm
anon_investor wrote: Fri Jul 26, 2019 1:26 pm
international001 wrote: Fri Jul 26, 2019 1:05 pm IMO, postponing HSA expenses to after retirement is stupid in most situations.
For super savers who are already maxing out all of their tax advantaged space (e.g. 401k, IRA, etc.) it makes sense to use an HSA as an additional place to save money. Not only can you always withdraw tax free for qualified medical expenses, but you can also withdraw funds for any reason at age 65+ and pay ordinary income rates (not subject to 20% tax penalty), effectively making it like a traditional IRA.
Right... but better to spend $1k in HSA and use an extra $1k in your Roth than just deferring that $1k expending for 20 years (if you have Roth space, of course)

If you can add your tax-sheltered space a ~5% and it's worth the trouble, go ahead. You also have to consider the risks than with 20 years laws change and you are not able to claim an old receipt
A super saver would not have any extra roth space (i.e. Roth IRA and mega backdoor Roth 401k maxed)... so using HSA for investment makes sense.
michaeljc70
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Re: Why save HSA receipts?

Post by michaeljc70 »

anon_investor wrote: Sat Jul 27, 2019 6:39 pm
international001 wrote: Sat Jul 27, 2019 6:32 pm
anon_investor wrote: Fri Jul 26, 2019 1:26 pm
international001 wrote: Fri Jul 26, 2019 1:05 pm IMO, postponing HSA expenses to after retirement is stupid in most situations.
For super savers who are already maxing out all of their tax advantaged space (e.g. 401k, IRA, etc.) it makes sense to use an HSA as an additional place to save money. Not only can you always withdraw tax free for qualified medical expenses, but you can also withdraw funds for any reason at age 65+ and pay ordinary income rates (not subject to 20% tax penalty), effectively making it like a traditional IRA.
Right... but better to spend $1k in HSA and use an extra $1k in your Roth than just deferring that $1k expending for 20 years (if you have Roth space, of course)

If you can add your tax-sheltered space a ~5% and it's worth the trouble, go ahead. You also have to consider the risks than with 20 years laws change and you are not able to claim an old receipt
A super saver would not have any extra roth space (i.e. Roth IRA and mega backdoor Roth 401k maxed)... so using HSA for investment makes sense.
+1

I contributed around $24k to my HSA, have never taken anything out, and now have over $90k in it. Granted, I have never had many medical expenses (beyond premiums). I have always maxed out other IRA/401k/Roths.
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PaddyMac
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Re: Why save HSA receipts?

Post by PaddyMac »

We have saved in our HSA for a few years while we were earning good money, and it's about $50K now. Now that we are semi-retired, we use it as an emergency medical fund. So I "budget" what I think our normal medical needs are, and then any surprises comes out of the HSA. Last year we dipped into it for a $6K bill for hernia surgery. We're still contributing, but more relaxed about withdrawing funds now too. Recently it was a chipped tooth requiring a crown (over a grand) and it felt great to just transfer that amount from the HSA without having to think about it.
international001
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Re: Why save HSA receipts?

Post by international001 »

michaeljc70 wrote: Sat Jul 27, 2019 10:04 pm
anon_investor wrote: Sat Jul 27, 2019 6:39 pm
international001 wrote: Sat Jul 27, 2019 6:32 pm
anon_investor wrote: Fri Jul 26, 2019 1:26 pm
international001 wrote: Fri Jul 26, 2019 1:05 pm IMO, postponing HSA expenses to after retirement is stupid in most situations.
For super savers who are already maxing out all of their tax advantaged space (e.g. 401k, IRA, etc.) it makes sense to use an HSA as an additional place to save money. Not only can you always withdraw tax free for qualified medical expenses, but you can also withdraw funds for any reason at age 65+ and pay ordinary income rates (not subject to 20% tax penalty), effectively making it like a traditional IRA.
Right... but better to spend $1k in HSA and use an extra $1k in your Roth than just deferring that $1k expending for 20 years (if you have Roth space, of course)

If you can add your tax-sheltered space a ~5% and it's worth the trouble, go ahead. You also have to consider the risks than with 20 years laws change and you are not able to claim an old receipt
A super saver would not have any extra roth space (i.e. Roth IRA and mega backdoor Roth 401k maxed)... so using HSA for investment makes sense.
+1

I contributed around $24k to my HSA, have never taken anything out, and now have over $90k in it. Granted, I have never had many medical expenses (beyond premiums). I have always maxed out other IRA/401k/Roths.
Which kind of investments grew x4 ? (!!)

My point if you added megabackdoor roth, then it's fine a little bit more of optimization with HSA. Not worth the effort for me.
michaeljc70
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Re: Why save HSA receipts?

Post by michaeljc70 »

international001 wrote: Sun Jul 28, 2019 10:19 am
michaeljc70 wrote: Sat Jul 27, 2019 10:04 pm
anon_investor wrote: Sat Jul 27, 2019 6:39 pm
international001 wrote: Sat Jul 27, 2019 6:32 pm
anon_investor wrote: Fri Jul 26, 2019 1:26 pm

For super savers who are already maxing out all of their tax advantaged space (e.g. 401k, IRA, etc.) it makes sense to use an HSA as an additional place to save money. Not only can you always withdraw tax free for qualified medical expenses, but you can also withdraw funds for any reason at age 65+ and pay ordinary income rates (not subject to 20% tax penalty), effectively making it like a traditional IRA.
Right... but better to spend $1k in HSA and use an extra $1k in your Roth than just deferring that $1k expending for 20 years (if you have Roth space, of course)

If you can add your tax-sheltered space a ~5% and it's worth the trouble, go ahead. You also have to consider the risks than with 20 years laws change and you are not able to claim an old receipt
A super saver would not have any extra roth space (i.e. Roth IRA and mega backdoor Roth 401k maxed)... so using HSA for investment makes sense.
+1

I contributed around $24k to my HSA, have never taken anything out, and now have over $90k in it. Granted, I have never had many medical expenses (beyond premiums). I have always maxed out other IRA/401k/Roths.
Which kind of investments grew x4 ? (!!)

My point if you added megabackdoor roth, then it's fine a little bit more of optimization with HSA. Not worth the effort for me.
Well, I started the HSA in 2005. It was almost exclusively in an S&P 500 fund or Total Stock Market fund except when I owned the Direxion 3x Technology fund from April 2009 to Sept 2009 :shock: .The Direxion fund more than doubled in those 5 months.
mix
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Location: Michigan

Re: Why save HSA receipts?

Post by mix »

Want to know a good way to trigger an IRS audit? Claim medical expense reimbursements from you HSA for expenses more than a couple years old.
theplayer11
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Re: Why save HSA receipts?

Post by theplayer11 »

mix wrote: Sun Jul 28, 2019 12:47 pm Want to know a good way to trigger an IRS audit? Claim medical expense reimbursements from you HSA for expenses more than a couple years old.
how would IRS know how old expenses were?..ad if you are indeed saving receipts, an IRS audit is no big deal
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FIREchief
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Re: Why save HSA receipts?

Post by FIREchief »

theplayer11 wrote: Sun Jul 28, 2019 12:49 pm
mix wrote: Sun Jul 28, 2019 12:47 pm Want to know a good way to trigger an IRS audit? Claim medical expense reimbursements from you HSA for expenses more than a couple years old.
how would IRS know how old expenses were?..ad if you are indeed saving receipts, an IRS audit is no big deal
Exactly. The IRS has no idea when you incurred the qualified medical expenses. Add to that that the IRS rules fully allow reimbursement of historical qualified expenses. The IRS understands tax laws better than anybody. :P
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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