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How to get the most out of your Health Savings Account (HSA)
I have an HSA (health savings account). Do I have to reimburse myself this year on my expenses? Great question. Under current IRS rules, there is no IRS-imposed deadline for reimbursing yourself from an HSA for a qualified medical expense. As long as the expense was incurred after your HSA was established, you can save the receipt for years (even decades) and reimburse yourself later. In the meantime, the money in your HSA can remain invested and continue growing tax-free. This creates a really powerful planning opportunity that a lot of people miss. The strategy works like this. You have a medical expense, a dentist visit, a prescription, a surgery. Instead of using your HSA card, you pay out of pocket and save the receipt. Your HSA stays fully invested and keeps growing tax-free. Ten, fifteen, twenty years later, you pull those receipts and reimburse yourself, completely tax-free. A few things you need to know before you do this: • Keep detailed records, receipts, and proof of payment. No receipts = no reimbursement • The expense must be a qualified medical expense under IRS rules. • The expense must have been incurred after the HSA was established. • You generally cannot use expenses that were reimbursed by insurance, paid through an FSA or HRA, claimed as a tax deduction, or previously reimbursed from the HSA. HSAs are one of the only accounts that give you a tax deduction going in, tax-free growth, and tax-free withdrawals coming out. That combination is rare. As always, you should work with your CPA or Financial Planner to see if you are eligible and be sure you understand how this might fit into your individual overall plan. #HSA #TaxPlanning #RetirementPlanning
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