How does HSA reimbursement work?

[Young Grasshopper]

So here's my situation: I have a high decutable HSA($1500 deductable) and need nasal surgery. I need to pay $1500 to my provider to have the work done. I only have $380 is my HSA currently, so I used the $380 in my HSA along with $1120 on one of my personal cards. In order to get my $1120 reimbursed back to ME(not back into my HSA), I need to wait until my HSA builds back up to $1120 and request reimbursement, does that sound right or am I wrong? I kept getting different answers on this from various reps.


Thanks

 

[IronWing]

As long as you keep records, you can reimburse yourself as the money comes into the HSA, at least as far as the IRS is concerned. You’ll have to check your plan rules to see if it is more restrictive.

 

[tynopik]

expenses can be reimbursed at any point in the future, so if you have receipts from 5 years ago and you can prove that 1) you had an hsa back then and 2) you haven't reimbursed yourself in the mean time, then you can pull that money out of the HSA whenever you want

that's how some people use them as retirement accounts. never withdraw from them, building up a huge stack of receipts, then using them at will in retirement

 

[FelixDeCat]

I would suggest upping your HSA contributions. I put in $200 a month in mine. It reduces your taxable income and can be used for any medical reason like dental work, glasses, etc.

 

[Schfifty Five]

I would suggest upping your HSA contributions. I put in $200 a month in mine. It reduces your taxable income and can be used for any medical reason like dental work, glasses, etc.

You can also contribute to your HSA outside of your normal payroll deductions, and then when it comes time to file taxes, you can treat those outside payments as deductions.

So, with that said, does anyone know if it's possible for the OP to contribute $1,120 to his HSA using his after-tax money, and then immediately withdrawing/reimbursing himself the $1,120 and get the $1,120 tax deduction later? It seems like this is no different than if he had enough money in his HSA to begin with, but obviously a few more steps involved. In theory it looks like it makes sense, but tax laws may say otherwise.

 

[deadlyapp]

I had something similar this year where I've pulled more out of my HSA than I would normally put in. I made a one time additional contribution so I could gain the tax benefits at the end of the year. Alternatively, as other posters have mentioned, you can let your HSA build back up and then reimburse yourself as long as you maintain good documentation.

My recommendation is since its on a credit card, if you have the cash, just do a one time contribution to your HSA (should take about a week) and then reimburse yourself (should take about a week) and pay off your card. Your HSA tax form at the end of the year will indicate the additional contribution and withdraw and you should get some tax benefit from it.

 

[dullard]

So, with that said, does anyone know if it's possible for the OP to contribute $1,120 to his HSA using his after-tax money, and then immediately withdrawing/reimbursing himself the $1,120 and get the $1,120 tax deduction later?

Yes, he can do that. Put in $1120 now, withdraw it as soon as it clears to reimburse himself, then when he files his 2018 taxes use this to lower his tax bill (or get a large tax refund). What is great is that this reduces INCOME and is not just a deduction. So, it can put him in a lower tax bracket, can qualify him for things that his income may have been too high, etc.

That said, the best thing to do is what tynopik said: don't reimburse yourself now. Keep it in the HSA growing tax free. That is why HSAs are best for the healthy and wealthy since they don't need to withdraw the HSA money and can just keep letting it grow with triple tax benefits (no tax on money that goes in, no tax on growth, no tax when withdrawing).

 

[Herr Kutz]

Since HSA contributions through your employer are not subject to FICA, I recommend always maxing it out so long as you have an option to invest a portion of it.

https://www.irs.gov/publications/p969#en_US_2013_publink1000204045
Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.

 

[Tweak155]

I max out my HSA for the reduced income alone... it's pretty nice as long as you wouldn't otherwise need that money on a regular basis.

 

[JoeBleed]

I've never done a reimbursement from my HSA, but i have had sinus surgery. they gave me the rough bill that you got which i had to pay up front. then a couple of months later, the hospital sends me back $900 ish back. which i had to go through the annoying process to properly put that back into my HSA account with out it counting as over contribution. I max out my contribution so it's not hard to do. the company i work for did this by about $3 year before last and i got penalized for it.....

I would follow the path of paying in the manner which you've already done. then as the money builds up, request for the reimbursement once you reach that point. and, who knows, maybe you'll get most of it back like it did.

Good luck with the surgery. Hope it helps you more than it did me.