Can I pay myself back later in the year if my HSA doesn't have adequate funds earlier in the year to pay for...
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3
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We are being offered an HSA/High Deductible plan and my only concern would be if I had to incur a significant expense at the beginning of the year - no plans to but you never know, right? If I don't have the money in the HSA plan to pay for such a large expense, but 6 months later I've accrued enough to pay for that expense, is there any way for me to "pay myself back" for that expense?
united-states hsa healthcare
New contributor
add a comment |
up vote
3
down vote
favorite
We are being offered an HSA/High Deductible plan and my only concern would be if I had to incur a significant expense at the beginning of the year - no plans to but you never know, right? If I don't have the money in the HSA plan to pay for such a large expense, but 6 months later I've accrued enough to pay for that expense, is there any way for me to "pay myself back" for that expense?
united-states hsa healthcare
New contributor
1
Are you asking if you can pay out-of-pocket and pay yourself back from the HSA once funds are available, or if you can pay from the HSA more than has been deposited?
– D Stanley
7 hours ago
2
In situation like this it makes sense to arrange for installment payments, and negotiate them as low as you can. And then pay installments from the HSA.
– SolutionMill
6 hours ago
add a comment |
up vote
3
down vote
favorite
up vote
3
down vote
favorite
We are being offered an HSA/High Deductible plan and my only concern would be if I had to incur a significant expense at the beginning of the year - no plans to but you never know, right? If I don't have the money in the HSA plan to pay for such a large expense, but 6 months later I've accrued enough to pay for that expense, is there any way for me to "pay myself back" for that expense?
united-states hsa healthcare
New contributor
We are being offered an HSA/High Deductible plan and my only concern would be if I had to incur a significant expense at the beginning of the year - no plans to but you never know, right? If I don't have the money in the HSA plan to pay for such a large expense, but 6 months later I've accrued enough to pay for that expense, is there any way for me to "pay myself back" for that expense?
united-states hsa healthcare
united-states hsa healthcare
New contributor
New contributor
edited 7 hours ago
Chris W. Rea
26.4k1586174
26.4k1586174
New contributor
asked 8 hours ago
Levi Wallach
161
161
New contributor
New contributor
1
Are you asking if you can pay out-of-pocket and pay yourself back from the HSA once funds are available, or if you can pay from the HSA more than has been deposited?
– D Stanley
7 hours ago
2
In situation like this it makes sense to arrange for installment payments, and negotiate them as low as you can. And then pay installments from the HSA.
– SolutionMill
6 hours ago
add a comment |
1
Are you asking if you can pay out-of-pocket and pay yourself back from the HSA once funds are available, or if you can pay from the HSA more than has been deposited?
– D Stanley
7 hours ago
2
In situation like this it makes sense to arrange for installment payments, and negotiate them as low as you can. And then pay installments from the HSA.
– SolutionMill
6 hours ago
1
1
Are you asking if you can pay out-of-pocket and pay yourself back from the HSA once funds are available, or if you can pay from the HSA more than has been deposited?
– D Stanley
7 hours ago
Are you asking if you can pay out-of-pocket and pay yourself back from the HSA once funds are available, or if you can pay from the HSA more than has been deposited?
– D Stanley
7 hours ago
2
2
In situation like this it makes sense to arrange for installment payments, and negotiate them as low as you can. And then pay installments from the HSA.
– SolutionMill
6 hours ago
In situation like this it makes sense to arrange for installment payments, and negotiate them as low as you can. And then pay installments from the HSA.
– SolutionMill
6 hours ago
add a comment |
3 Answers
3
active
oldest
votes
up vote
9
down vote
Can I pay myself back later in the year if my HSA doesn't have
adequate funds earlier in the year to pay for an expense?
Yes. You can request a distribution for any qualified medical expenses that were incurred any time after the HSA was established, there is no time limit. If you want to maximize tax-free growth you could pay everything out of pocket and wait years for reimbursement.
As Internal Revenue Bulletin: 2004-33 states:
Q-39. When must a distribution from an HSA be taken to pay or
reimburse, on a tax-free basis, qualified medical expenses incurred in
the current year?
A-39. An account beneficiary may defer to later taxable years
distributions from HSAs to pay or reimburse qualified medical expenses
incurred in the current year as long as the expenses were incurred
after the HSA was established. Similarly, a distribution from an HSA
in the current year can be used to pay or reimburse expenses incurred
in any prior year as long as the expenses were incurred after the HSA
was established. Thus, there is no time limit on when the distribution
must occur. However, to be excludable from the account beneficiary’s
gross income, he or she must keep records sufficient to later show
that the distributions were exclusively to pay or reimburse qualified
medical expenses, that the qualified medical expenses have not been
previously paid or reimbursed from another source and that the medical
expenses have not been taken as an itemized deduction in any prior
taxable year. See Notice 2004-2, Q&A 31 and also Notice 2004-25, for
transition relief in calendar year 2004 for reimbursement of medical
expenses incurred before opening an HSA.
Many people prioritize maximizing HSA contributions above everything except matching 401k. The contributions (if through employer) are pre-tax, the growth is tax-free, and if used for qualified medical expenses the distributions are tax free too. Whether or not that is a good strategy depends on the investment opportunities your HSA provides and whether or not you want to fuss with keeping medical receipts for many years and keep track of potential HSA rule-changes.
The IRS says "the qualified medical expenses have not been previously paid or reimbursed from another source". How does it affect the OPs desire "to pay myself back"?
– SolutionMill
6 hours ago
@SolutionMill Yeah that wording could be more clear, but they mean that it wasn't paid by insurance or some other third-party, no distributions for expenses you didn't actually incur.
– Hart CO
5 hours ago
add a comment |
up vote
1
down vote
One of the great benefits of the HSA is that you don't have to rush to spend all the money each year. This means if you maximize your contributions, and you don't spend it all, then the situation you are concerned about is only a problem in the first year.
But it still is an important issue. With the program I participate in you have several options when paying for items or services with the HSA.
You can use a debit card, this pulls the money from the account quickly. They have protections to limit the usage of the card to specific types of vendors. This works best when you know the final price of the service or product: co-pays, prescriptions...
You can go to the account website and have the custodian pay the provider. This works best if you will not know the final price of the service. Just wait until the provider files the paperwork, and the Explanation of Benefits is generated. Then send the money to the provider, but don't wait too long so you don't get charged interest or penalties by the provider.
You can pay from your regular funds, and then go to the website and reimburse your self. This works best if the funds are low, or you were not able to use one of the other methods. The complication has been that the account custodian wants a copy of the applicable EOB, to make sure that you aren't pulling money out to cover items that insurance already paid for.
If you are short of funds you will have to use option #3 listed above.
Make sure that the service was provided after the start date of the HSA/High Deductible plan, the custodian will be looking for that. If you decide to ave your receipts for years, make sure you don't get confused and submit the same item twice.
add a comment |
up vote
0
down vote
I would check with your benefits department and/or look at the terms of the plan. My HSA allows me to use funds before they have been deposited (up to a limit) but I don't know if that's universal to all HSA plans.
add a comment |
3 Answers
3
active
oldest
votes
3 Answers
3
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
9
down vote
Can I pay myself back later in the year if my HSA doesn't have
adequate funds earlier in the year to pay for an expense?
Yes. You can request a distribution for any qualified medical expenses that were incurred any time after the HSA was established, there is no time limit. If you want to maximize tax-free growth you could pay everything out of pocket and wait years for reimbursement.
As Internal Revenue Bulletin: 2004-33 states:
Q-39. When must a distribution from an HSA be taken to pay or
reimburse, on a tax-free basis, qualified medical expenses incurred in
the current year?
A-39. An account beneficiary may defer to later taxable years
distributions from HSAs to pay or reimburse qualified medical expenses
incurred in the current year as long as the expenses were incurred
after the HSA was established. Similarly, a distribution from an HSA
in the current year can be used to pay or reimburse expenses incurred
in any prior year as long as the expenses were incurred after the HSA
was established. Thus, there is no time limit on when the distribution
must occur. However, to be excludable from the account beneficiary’s
gross income, he or she must keep records sufficient to later show
that the distributions were exclusively to pay or reimburse qualified
medical expenses, that the qualified medical expenses have not been
previously paid or reimbursed from another source and that the medical
expenses have not been taken as an itemized deduction in any prior
taxable year. See Notice 2004-2, Q&A 31 and also Notice 2004-25, for
transition relief in calendar year 2004 for reimbursement of medical
expenses incurred before opening an HSA.
Many people prioritize maximizing HSA contributions above everything except matching 401k. The contributions (if through employer) are pre-tax, the growth is tax-free, and if used for qualified medical expenses the distributions are tax free too. Whether or not that is a good strategy depends on the investment opportunities your HSA provides and whether or not you want to fuss with keeping medical receipts for many years and keep track of potential HSA rule-changes.
The IRS says "the qualified medical expenses have not been previously paid or reimbursed from another source". How does it affect the OPs desire "to pay myself back"?
– SolutionMill
6 hours ago
@SolutionMill Yeah that wording could be more clear, but they mean that it wasn't paid by insurance or some other third-party, no distributions for expenses you didn't actually incur.
– Hart CO
5 hours ago
add a comment |
up vote
9
down vote
Can I pay myself back later in the year if my HSA doesn't have
adequate funds earlier in the year to pay for an expense?
Yes. You can request a distribution for any qualified medical expenses that were incurred any time after the HSA was established, there is no time limit. If you want to maximize tax-free growth you could pay everything out of pocket and wait years for reimbursement.
As Internal Revenue Bulletin: 2004-33 states:
Q-39. When must a distribution from an HSA be taken to pay or
reimburse, on a tax-free basis, qualified medical expenses incurred in
the current year?
A-39. An account beneficiary may defer to later taxable years
distributions from HSAs to pay or reimburse qualified medical expenses
incurred in the current year as long as the expenses were incurred
after the HSA was established. Similarly, a distribution from an HSA
in the current year can be used to pay or reimburse expenses incurred
in any prior year as long as the expenses were incurred after the HSA
was established. Thus, there is no time limit on when the distribution
must occur. However, to be excludable from the account beneficiary’s
gross income, he or she must keep records sufficient to later show
that the distributions were exclusively to pay or reimburse qualified
medical expenses, that the qualified medical expenses have not been
previously paid or reimbursed from another source and that the medical
expenses have not been taken as an itemized deduction in any prior
taxable year. See Notice 2004-2, Q&A 31 and also Notice 2004-25, for
transition relief in calendar year 2004 for reimbursement of medical
expenses incurred before opening an HSA.
Many people prioritize maximizing HSA contributions above everything except matching 401k. The contributions (if through employer) are pre-tax, the growth is tax-free, and if used for qualified medical expenses the distributions are tax free too. Whether or not that is a good strategy depends on the investment opportunities your HSA provides and whether or not you want to fuss with keeping medical receipts for many years and keep track of potential HSA rule-changes.
The IRS says "the qualified medical expenses have not been previously paid or reimbursed from another source". How does it affect the OPs desire "to pay myself back"?
– SolutionMill
6 hours ago
@SolutionMill Yeah that wording could be more clear, but they mean that it wasn't paid by insurance or some other third-party, no distributions for expenses you didn't actually incur.
– Hart CO
5 hours ago
add a comment |
up vote
9
down vote
up vote
9
down vote
Can I pay myself back later in the year if my HSA doesn't have
adequate funds earlier in the year to pay for an expense?
Yes. You can request a distribution for any qualified medical expenses that were incurred any time after the HSA was established, there is no time limit. If you want to maximize tax-free growth you could pay everything out of pocket and wait years for reimbursement.
As Internal Revenue Bulletin: 2004-33 states:
Q-39. When must a distribution from an HSA be taken to pay or
reimburse, on a tax-free basis, qualified medical expenses incurred in
the current year?
A-39. An account beneficiary may defer to later taxable years
distributions from HSAs to pay or reimburse qualified medical expenses
incurred in the current year as long as the expenses were incurred
after the HSA was established. Similarly, a distribution from an HSA
in the current year can be used to pay or reimburse expenses incurred
in any prior year as long as the expenses were incurred after the HSA
was established. Thus, there is no time limit on when the distribution
must occur. However, to be excludable from the account beneficiary’s
gross income, he or she must keep records sufficient to later show
that the distributions were exclusively to pay or reimburse qualified
medical expenses, that the qualified medical expenses have not been
previously paid or reimbursed from another source and that the medical
expenses have not been taken as an itemized deduction in any prior
taxable year. See Notice 2004-2, Q&A 31 and also Notice 2004-25, for
transition relief in calendar year 2004 for reimbursement of medical
expenses incurred before opening an HSA.
Many people prioritize maximizing HSA contributions above everything except matching 401k. The contributions (if through employer) are pre-tax, the growth is tax-free, and if used for qualified medical expenses the distributions are tax free too. Whether or not that is a good strategy depends on the investment opportunities your HSA provides and whether or not you want to fuss with keeping medical receipts for many years and keep track of potential HSA rule-changes.
Can I pay myself back later in the year if my HSA doesn't have
adequate funds earlier in the year to pay for an expense?
Yes. You can request a distribution for any qualified medical expenses that were incurred any time after the HSA was established, there is no time limit. If you want to maximize tax-free growth you could pay everything out of pocket and wait years for reimbursement.
As Internal Revenue Bulletin: 2004-33 states:
Q-39. When must a distribution from an HSA be taken to pay or
reimburse, on a tax-free basis, qualified medical expenses incurred in
the current year?
A-39. An account beneficiary may defer to later taxable years
distributions from HSAs to pay or reimburse qualified medical expenses
incurred in the current year as long as the expenses were incurred
after the HSA was established. Similarly, a distribution from an HSA
in the current year can be used to pay or reimburse expenses incurred
in any prior year as long as the expenses were incurred after the HSA
was established. Thus, there is no time limit on when the distribution
must occur. However, to be excludable from the account beneficiary’s
gross income, he or she must keep records sufficient to later show
that the distributions were exclusively to pay or reimburse qualified
medical expenses, that the qualified medical expenses have not been
previously paid or reimbursed from another source and that the medical
expenses have not been taken as an itemized deduction in any prior
taxable year. See Notice 2004-2, Q&A 31 and also Notice 2004-25, for
transition relief in calendar year 2004 for reimbursement of medical
expenses incurred before opening an HSA.
Many people prioritize maximizing HSA contributions above everything except matching 401k. The contributions (if through employer) are pre-tax, the growth is tax-free, and if used for qualified medical expenses the distributions are tax free too. Whether or not that is a good strategy depends on the investment opportunities your HSA provides and whether or not you want to fuss with keeping medical receipts for many years and keep track of potential HSA rule-changes.
edited 6 hours ago
answered 7 hours ago
Hart CO
24.5k15873
24.5k15873
The IRS says "the qualified medical expenses have not been previously paid or reimbursed from another source". How does it affect the OPs desire "to pay myself back"?
– SolutionMill
6 hours ago
@SolutionMill Yeah that wording could be more clear, but they mean that it wasn't paid by insurance or some other third-party, no distributions for expenses you didn't actually incur.
– Hart CO
5 hours ago
add a comment |
The IRS says "the qualified medical expenses have not been previously paid or reimbursed from another source". How does it affect the OPs desire "to pay myself back"?
– SolutionMill
6 hours ago
@SolutionMill Yeah that wording could be more clear, but they mean that it wasn't paid by insurance or some other third-party, no distributions for expenses you didn't actually incur.
– Hart CO
5 hours ago
The IRS says "the qualified medical expenses have not been previously paid or reimbursed from another source". How does it affect the OPs desire "to pay myself back"?
– SolutionMill
6 hours ago
The IRS says "the qualified medical expenses have not been previously paid or reimbursed from another source". How does it affect the OPs desire "to pay myself back"?
– SolutionMill
6 hours ago
@SolutionMill Yeah that wording could be more clear, but they mean that it wasn't paid by insurance or some other third-party, no distributions for expenses you didn't actually incur.
– Hart CO
5 hours ago
@SolutionMill Yeah that wording could be more clear, but they mean that it wasn't paid by insurance or some other third-party, no distributions for expenses you didn't actually incur.
– Hart CO
5 hours ago
add a comment |
up vote
1
down vote
One of the great benefits of the HSA is that you don't have to rush to spend all the money each year. This means if you maximize your contributions, and you don't spend it all, then the situation you are concerned about is only a problem in the first year.
But it still is an important issue. With the program I participate in you have several options when paying for items or services with the HSA.
You can use a debit card, this pulls the money from the account quickly. They have protections to limit the usage of the card to specific types of vendors. This works best when you know the final price of the service or product: co-pays, prescriptions...
You can go to the account website and have the custodian pay the provider. This works best if you will not know the final price of the service. Just wait until the provider files the paperwork, and the Explanation of Benefits is generated. Then send the money to the provider, but don't wait too long so you don't get charged interest or penalties by the provider.
You can pay from your regular funds, and then go to the website and reimburse your self. This works best if the funds are low, or you were not able to use one of the other methods. The complication has been that the account custodian wants a copy of the applicable EOB, to make sure that you aren't pulling money out to cover items that insurance already paid for.
If you are short of funds you will have to use option #3 listed above.
Make sure that the service was provided after the start date of the HSA/High Deductible plan, the custodian will be looking for that. If you decide to ave your receipts for years, make sure you don't get confused and submit the same item twice.
add a comment |
up vote
1
down vote
One of the great benefits of the HSA is that you don't have to rush to spend all the money each year. This means if you maximize your contributions, and you don't spend it all, then the situation you are concerned about is only a problem in the first year.
But it still is an important issue. With the program I participate in you have several options when paying for items or services with the HSA.
You can use a debit card, this pulls the money from the account quickly. They have protections to limit the usage of the card to specific types of vendors. This works best when you know the final price of the service or product: co-pays, prescriptions...
You can go to the account website and have the custodian pay the provider. This works best if you will not know the final price of the service. Just wait until the provider files the paperwork, and the Explanation of Benefits is generated. Then send the money to the provider, but don't wait too long so you don't get charged interest or penalties by the provider.
You can pay from your regular funds, and then go to the website and reimburse your self. This works best if the funds are low, or you were not able to use one of the other methods. The complication has been that the account custodian wants a copy of the applicable EOB, to make sure that you aren't pulling money out to cover items that insurance already paid for.
If you are short of funds you will have to use option #3 listed above.
Make sure that the service was provided after the start date of the HSA/High Deductible plan, the custodian will be looking for that. If you decide to ave your receipts for years, make sure you don't get confused and submit the same item twice.
add a comment |
up vote
1
down vote
up vote
1
down vote
One of the great benefits of the HSA is that you don't have to rush to spend all the money each year. This means if you maximize your contributions, and you don't spend it all, then the situation you are concerned about is only a problem in the first year.
But it still is an important issue. With the program I participate in you have several options when paying for items or services with the HSA.
You can use a debit card, this pulls the money from the account quickly. They have protections to limit the usage of the card to specific types of vendors. This works best when you know the final price of the service or product: co-pays, prescriptions...
You can go to the account website and have the custodian pay the provider. This works best if you will not know the final price of the service. Just wait until the provider files the paperwork, and the Explanation of Benefits is generated. Then send the money to the provider, but don't wait too long so you don't get charged interest or penalties by the provider.
You can pay from your regular funds, and then go to the website and reimburse your self. This works best if the funds are low, or you were not able to use one of the other methods. The complication has been that the account custodian wants a copy of the applicable EOB, to make sure that you aren't pulling money out to cover items that insurance already paid for.
If you are short of funds you will have to use option #3 listed above.
Make sure that the service was provided after the start date of the HSA/High Deductible plan, the custodian will be looking for that. If you decide to ave your receipts for years, make sure you don't get confused and submit the same item twice.
One of the great benefits of the HSA is that you don't have to rush to spend all the money each year. This means if you maximize your contributions, and you don't spend it all, then the situation you are concerned about is only a problem in the first year.
But it still is an important issue. With the program I participate in you have several options when paying for items or services with the HSA.
You can use a debit card, this pulls the money from the account quickly. They have protections to limit the usage of the card to specific types of vendors. This works best when you know the final price of the service or product: co-pays, prescriptions...
You can go to the account website and have the custodian pay the provider. This works best if you will not know the final price of the service. Just wait until the provider files the paperwork, and the Explanation of Benefits is generated. Then send the money to the provider, but don't wait too long so you don't get charged interest or penalties by the provider.
You can pay from your regular funds, and then go to the website and reimburse your self. This works best if the funds are low, or you were not able to use one of the other methods. The complication has been that the account custodian wants a copy of the applicable EOB, to make sure that you aren't pulling money out to cover items that insurance already paid for.
If you are short of funds you will have to use option #3 listed above.
Make sure that the service was provided after the start date of the HSA/High Deductible plan, the custodian will be looking for that. If you decide to ave your receipts for years, make sure you don't get confused and submit the same item twice.
answered 6 hours ago
mhoran_psprep
64.4k888167
64.4k888167
add a comment |
add a comment |
up vote
0
down vote
I would check with your benefits department and/or look at the terms of the plan. My HSA allows me to use funds before they have been deposited (up to a limit) but I don't know if that's universal to all HSA plans.
add a comment |
up vote
0
down vote
I would check with your benefits department and/or look at the terms of the plan. My HSA allows me to use funds before they have been deposited (up to a limit) but I don't know if that's universal to all HSA plans.
add a comment |
up vote
0
down vote
up vote
0
down vote
I would check with your benefits department and/or look at the terms of the plan. My HSA allows me to use funds before they have been deposited (up to a limit) but I don't know if that's universal to all HSA plans.
I would check with your benefits department and/or look at the terms of the plan. My HSA allows me to use funds before they have been deposited (up to a limit) but I don't know if that's universal to all HSA plans.
answered 8 hours ago
D Stanley
50.3k8150159
50.3k8150159
add a comment |
add a comment |
Levi Wallach is a new contributor. Be nice, and check out our Code of Conduct.
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1
Are you asking if you can pay out-of-pocket and pay yourself back from the HSA once funds are available, or if you can pay from the HSA more than has been deposited?
– D Stanley
7 hours ago
2
In situation like this it makes sense to arrange for installment payments, and negotiate them as low as you can. And then pay installments from the HSA.
– SolutionMill
6 hours ago