HSA Receipt

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boogiehead
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HSA Receipt

Post by boogiehead »

I'm trying to organize my HSA receipts which I haven't been doing the best job of doing, but I'm thinking about just downloading the claims detail from my insurance provider BCBS which shows the service and how much I owe/paid for the visit. Just wanted to check if this would be sufficient as I don't usually get or keep the receipt from the doctor as I could fall back on my credit card statements for details of the charge.
sycamore
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Re: HSA Receipt

Post by sycamore »

I don't use my HSA to pay current bills but for the future HSA withdrawals I'll keep
- Explanations of Benefit and medical provider's invoice/bill (to help establish the expense was qualified)
- receipt for payment and/or CC statement (showing I paid the relevant amount)
- HSA statements showing the withdrawals

You'll find some info on previous BH threads discussing your question.

FWIW, here's what the IRS says about it (from https://www.irs.gov/pub/irs-pdf/p969.pdf)
Recordkeeping.

You must keep records sufficient to show that:
• The distributions were exclusively to pay or reimburse qualified medical expenses,
• The qualified medical expenses hadn’t been previously paid or reimbursed from another source, and
• The medical expenses hadn’t been taken as an itemized deduction in any year.

Don’t send these records with your tax return. Keep them with your tax records.
DarkHelmetII
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Re: HSA Receipt

Post by DarkHelmetII »

I have the same question and am interested in knowing experiences from Bogleheads as to which of the following works / doesn't work:

1) Bill from provider
2) Actual payment made to provider (e.g. cash receipt, check, credit card statement)
3) Explanation of benefits from insurance company showing "patient responsibility"

Perhaps I am overthinking but I know from experience #1 #2 and #3 may not all be the same due to bookkeeping errors or "quick pay" discounts, among other factors. Ultimately, I presume this comes down to what an IRS investigator will accept in the case of an audit, for which I doubt there is hard and fast documentation as to what exactly is permissible or not.

I understand the "safest" thing is to have all three which I may end up doing going forward but still nonetheless interested in experiences or, if it exists, more specific authoritative (e.g. IRS.gov or similar) literature that provides more detailed guidance.
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oldcomputerguy
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Re: HSA Receipt

Post by oldcomputerguy »

From the time my wife enrolled in her workplace's HDHP and set up her HSA, we have always downloaded and kept three things for each expense as PDFs:
  1. The invoice from the provider (usually a scan from the paper bill)
  2. Evidence of where we paid the expense (a section of screen capture from the credit card or checking account that was used to pay the expense)
  3. Evidence of each reimbursement from her HSA with the amount of reimbursement shown
I have all of these collected over the lifetime of the HSA and organized by month/year. If the IRS ever comes knocking at the door, I can document and demonstrate the validity of every penny spent from our HSA. Perhaps that's overkill, but I sleep better at night having this on hand.
theplayer11
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Re: HSA Receipt

Post by theplayer11 »

I assume you will need proof of payment, bill is not enough
Spirit Rider
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Re: HSA Receipt

Post by Spirit Rider »

  1. In addition to proof of payment, you should have evidence that it was a qualified medical expense.
  2. While most prescription and qualified product/supply receipts that identify prescription/product/supply would suffice, other proofs of payment (cancelled check, bank/credit card statements, bare credit card receipt, etc..) would not. Even some provider bills that do not identify the service provided are not sufficient and would require an EOB.
  3. You should have proof that it was not already reimbursed. You should have all statements from all HSA accounts and records of what expenses were paid from what distributions. A spreadsheet is best for this.
  4. Finally, you need proof it was not claimed as a deduction. You should retain copies of all Form 1040s and Schedule As containing medical expenses deductions. For each such Schedule A, you should have proof of each medical expense to demonstrate that it was not also reimbursed from an HSA.
When I received a CP2000 Notice on large HSA distributions*, I only provided a subset of 1 and 2 and received notice it was closed. However, I was prepared with the required proofs, which might likely be required in an in-person audit.

*I used a combination of my TLH carryovers and qualified HSA distributions from early retirement to Medicare minimizing my ACA-MAGI to qualify for ACA base and cost sharing subsidies.

I have depleted my capital losses and my HSA account, but preserved most of my Roth accounts for IRMAA cliff management. Following my belief that Roth tax-free distributions with no strings are far better than HSA distribution with strings (proof of qualified distributions).
jebmke
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Re: HSA Receipt

Post by jebmke »

theplayer11 wrote: Sat Aug 29, 2020 6:39 am I assume you will need proof of payment, bill is not enough
I don't know for sure. I have had two CP letters that involved HSAs. For some items, all I provided was a copy of the invoice. For our largest providers (PCP, dentist and one specialist) I request a statement in January for the prior year. It includes all charges, all payments and shows zero balance. The payments are typically broken down insurance reimbursement, write-off to contract rate and my payments.

All the pharmacies can provide an annual summary with Rx payment you made.

A couple of observations from the two letters:

They typically ask for all docs on F8889 and may also sweep up Schedule A. They did this in my case despite no medical deductions on Schedule A. Keep in mind that in addition to disbursements, Form 8889 may also include contributions to the HSA. It also includes an assertion about health care coverage. To demonstrate that I was covered by an HSA-eligible HDHP plan I provided a copy of the confirmation I received from my retiree plan that indicated it was an eligible HDHP plan.

My opinion is that they look for "reasonable" evidence when looking at documents - especially if amounts are not huge. Invoices are probably acceptable evidence. I work with a couple of former IRS agents in TaxAide and they have both told me that the IRS is really just looking for reasonable assurance in the case of smaller stuff on the average return.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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anon_investor
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Re: HSA Receipt

Post by anon_investor »

theplayer11 wrote: Sat Aug 29, 2020 6:39 am I assume you will need proof of payment, bill is not enough
+1. I have only been keeping the provider's statement and payment receipt. Maybe I should download the CC statements and EOB too, since I am not planning use the HSA for a couple of decades.
Spirit Rider
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Re: HSA Receipt

Post by Spirit Rider »

jebmke wrote: Sat Aug 29, 2020 8:14 am My opinion is that they look for "reasonable" evidence when looking at documents - especially if amounts are not huge. Invoices are probably acceptable evidence. I work with a couple of former IRS agents in TaxAide and they have both told me that the IRS is really just looking for reasonable assurance in the case of smaller stuff on the average return.
There is much less scrutiny in a CP2000 Notice. It is just the IRS making a taxable assumption that the taxpayer can counter with exculpable facts. In most cases a reasonable explanation with modest detail is enough. The IRM lays out much higher levels of scrutiny for any in-person audit.

You, I and the BH community should not make any assumptions about the lack of a requirement for detailed evidence required in our CP2000 Notices.
jebmke
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Re: HSA Receipt

Post by jebmke »

Spirit Rider wrote: Sat Aug 29, 2020 11:35 am
jebmke wrote: Sat Aug 29, 2020 8:14 am My opinion is that they look for "reasonable" evidence when looking at documents - especially if amounts are not huge. Invoices are probably acceptable evidence. I work with a couple of former IRS agents in TaxAide and they have both told me that the IRS is really just looking for reasonable assurance in the case of smaller stuff on the average return.
There is much less scrutiny in a CP2000 Notice. It is just the IRS making a taxable assumption that the taxpayer can counter with exculpable facts. In most cases a reasonable explanation with modest detail is enough. The IRM lays out much higher levels of scrutiny for any in-person audit.

You, I and the BH community should not make any assumptions about the lack of a requirement for detailed evidence required in our CP2000 Notices.
If the IRS wants to send someone out for an in-person audit of a $15 co-pay on a physical therapy bill, they know where to find me. They didn't come out for a $563,000 1341 deduction so maybe they have better things to do with the few people they have left.
When you discover that you are riding a dead horse, the best strategy is to dismount.
Spirit Rider
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Re: HSA Receipt

Post by Spirit Rider »

jebmke wrote: Sat Aug 29, 2020 11:41 am
Spirit Rider wrote: Sat Aug 29, 2020 11:35 am
jebmke wrote: Sat Aug 29, 2020 8:14 am My opinion is that they look for "reasonable" evidence when looking at documents - especially if amounts are not huge. Invoices are probably acceptable evidence. I work with a couple of former IRS agents in TaxAide and they have both told me that the IRS is really just looking for reasonable assurance in the case of smaller stuff on the average return.
There is much less scrutiny in a CP2000 Notice. It is just the IRS making a taxable assumption that the taxpayer can counter with exculpable facts. In most cases a reasonable explanation with modest detail is enough. The IRM lays out much higher levels of scrutiny for any in-person audit.

You, I and the BH community should not make any assumptions about the lack of a requirement for detailed evidence required in our CP2000 Notices.
If the IRS wants to send someone out for an in-person audit of a $15 co-pay on a physical therapy bill, they know where to find me. They didn't come out for a $563,000 1341 deduction so maybe they have better things to do with the few people they have left.
These days the IRS only seems to do field audits on businesses and office audits on high net-worth individuals, perceived tax evasion and random audits such as the TCMP.

The latter is like winning the lottery in reverse. They are doing it for statistical purposes and want to know everything. I think they do less than 100K of these a year, so the odds are pretty low.
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FIREchief
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Re: HSA Receipt

Post by FIREchief »

Spirit Rider wrote: Sat Aug 29, 2020 7:54 am When I received a CP2000 Notice on large HSA distributions*, I only provided a subset of 1 and 2 and received notice it was closed. However, I was prepared with the required proofs, which might likely be required in an in-person audit.
Would you mind sharing with us how large the distribution was that triggered this? I'm not looking for an exact number. Was it over $10K? Over $15K? Thanks.
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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FIREchief
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Re: HSA Receipt

Post by FIREchief »

Spirit Rider wrote: Sat Aug 29, 2020 7:54 am
  1. In addition to proof of payment, you should have evidence that it was a qualified medical expense.
  2. While most prescription and qualified product/supply receipts that identify prescription/product/supply would suffice, other proofs of payment (cancelled check, bank/credit card statements, bare credit card receipt, etc..) would not. Even some provider bills that do not identify the service provided are not sufficient and would require an EOB.
  3. You should have proof that it was not already reimbursed. You should have all statements from all HSA accounts and records of what expenses were paid from what distributions. A spreadsheet is best for this.
  4. Finally, you need proof it was not claimed as a deduction. You should retain copies of all Form 1040s and Schedule As containing medical expenses deductions. For each such Schedule A, you should have proof of each medical expense to demonstrate that it was not also reimbursed from an HSA.
I don't agree with the part of "3" suggesting retention of HSA statements. I've never made more than one or two HSA withdrawals during a single tax year, so any account statements would be redundant with the 1099-SA issued by the custodian. I do agree with keeping a master spreadsheet that tracks every reimbursed eligible expense to a specific HSA withdrawal.

Also, good point about number 4. I've been doing this for every year that I've taken HSA withdrawals. I would add copies of state returns as well. My state has allowed addition of itemized medical expenses at the state level even if they weren't itemized at the federal level.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Spirit Rider
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Re: HSA Receipt

Post by Spirit Rider »

FIREchief wrote: Sat Aug 29, 2020 12:05 pm
Spirit Rider wrote: Sat Aug 29, 2020 7:54 am When I received a CP2000 Notice on large HSA distributions*, I only provided a subset of 1 and 2 and received notice it was closed. However, I was prepared with the required proofs, which might likely be required in an in-person audit.
Would you mind sharing with us how large the distribution was that triggered this? I'm not looking for an exact number. Was it over $10K? Over $15K? Thanks.
It was multiples of the annual contribution limit. I distributed my entire HSA over several years.
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Nate79
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Re: HSA Receipt

Post by Nate79 »

I keep any form of receipt that I have, preferably something that is itemized. I have the original HSA statement from when I opened the first HSA which establishes an open date. And I have an excel sheet listing each expense, date, who it was for, the provider name, etc. Tgese are kept on a computer and backed up to google drive. That's it. I'm not going to worry about keeping all the extra information that is listed in this thread because HSAs were created for the masses, to be simple, and are used by millions of people. And 99.999% of those people aren't keeping a single proof of anything at all. They are just using them as they were designed to pay for medical expenses. If the IRS expected people to keep documentation then basically the entire population except for a few Bogleheads are not in compliance.
neilpilot
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Re: HSA Receipt

Post by neilpilot »

FIREchief wrote: Sat Aug 29, 2020 12:05 pm
Spirit Rider wrote: Sat Aug 29, 2020 7:54 am When I received a CP2000 Notice on large HSA distributions*, I only provided a subset of 1 and 2 and received notice it was closed. However, I was prepared with the required proofs, which might likely be required in an in-person audit.
Would you mind sharing with us how large the distribution was that triggered this? I'm not looking for an exact number. Was it over $10K? Over $15K? Thanks.
Can't answer for Spirit Rider, but I decided to cash out a $22k HSA in TY2017. Simply didn't want to manage the separate account going forward.

To date, I haven't received any request from the IRS to document the basis of that distribution.
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FIREchief
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Re: HSA Receipt

Post by FIREchief »

Spirit Rider wrote: Sat Aug 29, 2020 1:19 pm
FIREchief wrote: Sat Aug 29, 2020 12:05 pm
Spirit Rider wrote: Sat Aug 29, 2020 7:54 am When I received a CP2000 Notice on large HSA distributions*, I only provided a subset of 1 and 2 and received notice it was closed. However, I was prepared with the required proofs, which might likely be required in an in-person audit.
Would you mind sharing with us how large the distribution was that triggered this? I'm not looking for an exact number. Was it over $10K? Over $15K? Thanks.
It was multiples of the annual contribution limit. I distributed my entire HSA over several years.
Thanks. We haven't heard many reports of IRS concerns, but the few we have heard have tended to be in excess of $10K in a single calendar year. I've never exceeded $10K in an given year, and haven't had any attention from the IRS. If there are any readers who would like to share additional data points, please do. I have distributed some, but don't plan any distributions this year or for the foreseeable future. At some point, I anticipate commencing some annual distributions just to prevent the balance from growing too large. If I need some additional cash at some point for a lumpy expense (e.g. car replacement), I may tap the HSA balance so as to not interfere with ongoing annual financial strategies.
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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FIREchief
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Re: HSA Receipt

Post by FIREchief »

neilpilot wrote: Sat Aug 29, 2020 1:41 pm
FIREchief wrote: Sat Aug 29, 2020 12:05 pm
Spirit Rider wrote: Sat Aug 29, 2020 7:54 am When I received a CP2000 Notice on large HSA distributions*, I only provided a subset of 1 and 2 and received notice it was closed. However, I was prepared with the required proofs, which might likely be required in an in-person audit.
Would you mind sharing with us how large the distribution was that triggered this? I'm not looking for an exact number. Was it over $10K? Over $15K? Thanks.
Can't answer for Spirit Rider, but I decided to cash out a $22k HSA in TY2017. Simply didn't want to manage the separate account going forward.

To date, I haven't received any request from the IRS to document the basis of that distribution.
Thanks. That's interesting.
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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FIREchief
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Re: HSA Receipt

Post by FIREchief »

Nate79 wrote: Sat Aug 29, 2020 1:19 pm I keep any form of receipt that I have, preferably something that is itemized. I have the original HSA statement from when I opened the first HSA which establishes an open date. And I have an excel sheet listing each expense, date, who it was for, the provider name, etc.
Do you include mileage on your spreadsheet?
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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Nate79
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Re: HSA Receipt

Post by Nate79 »

FIREchief wrote: Sat Aug 29, 2020 1:46 pm
Nate79 wrote: Sat Aug 29, 2020 1:19 pm I keep any form of receipt that I have, preferably something that is itemized. I have the original HSA statement from when I opened the first HSA which establishes an open date. And I have an excel sheet listing each expense, date, who it was for, the provider name, etc.
Do you include mileage on your spreadsheet?
I don't include mileage just to make things simple.
TropikThunder
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Re: HSA Receipt

Post by TropikThunder »

Call me crazy, but for some reason I think I'll have enough medical expenses during retirement to drain my HSA without having to rely on decades-old doctor visits and prescriptions.
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