For HSA Receipt Savers

[kaneohe]

Quote:

Originally Posted by mpeirce I'm a bit unclear on if saving the quarterly printout from the insurance company is sufficient documentation for later use of that spending from an HSA? With our HDHP w/ HSA he always send everything through insurance so it counts against the deductible. Obviously some things are covered, some are not, and some are partially covered. The statement from the insurance company is the only place that shows the amount we actually had to pay.

That's a good start. In my mind, that statement assigns responsibilities to who owes what and what the insurance paid. It does not necessarily show what you paid? only what you owe so somehow you need to show that you paid a particular bill. Then you need to show that you didn't use the same expenses to get a tax deduction. That means copies of your tax returns to show you either didn't take a deduction or that you did and the supporting receipts for those......again that you actually paid and what it was for.

[ChrisC]

Quote:

Originally Posted by mpeirce I'm a bit unclear on if saving the quarterly printout from the insurance company is sufficient documentation for later use of that spending from an HSA? With our HDHP w/ HSA he always send everything through insurance so it counts against the deductible. Obviously some things are covered, some are not, and some are partially covered. The statement from the insurance company is the only place that shows the amount we actually had to pay.

You sure you don't have multiple layers of documentation of expenses? I do and most of the stuff goes in my files. I also have a spreadsheet recording the expenses as well. If that's not enough, I also use my HSA's custodian's management tool to record the expenses as well. Now, I'm thinking about scanning some of this stuff, too.

In my case, I pay almost all bills by credit card (so I have the credit card receipt and monthly statement showing payment); the provider (pharmacy, dentist, doctor, hospital or even retail store for qualified over the counter expenses) provides me with a bill/receipt, and the insurance company sends me an EOB, to the extent I have a co-pay or partial insurance coverage. In fact, the only provider who doesn't provide me with an invoice or an annual statement is my LTCi carrier, who I now pay directly from my HSA. But if I needed a statement from the carrier, I'm sure I can get one easily.

I wouldn't just rely on statements from the insurance company.

[mpeirce]

Quote:

Originally Posted by kaneohe That's a good start. In my mind, that statement assigns responsibilities to who owes what and what the insurance paid. It does not necessarily show what you paid? only what you owe so somehow you need to show that you paid a particular bill. Then you need to show that you didn't use the same expenses to get a tax deduction. That means copies of your tax returns to show you either didn't take a deduction or that you did and the supporting receipts for those......again that you actually paid and what it was for.

The expenses are way to low to be used as a tax deduction - at least up to now, but I do keep all my old tax returns (PDF files I get from the CPA).

So the insurance company sends me printouts of my non-covered expenses (which I scan and keep) and my tax return shows that I didn't take them as a tax deduction.

I think I'm good to go by just keeping the old PDF files around for the next 25 years...

[travelover]

Perhaps I'm too cavalier, but given current IRS staffing, I can't imagine them going after an individual to prove normal looking HSA contributions and withdrawals.

[kaneohe]

Quote:

Originally Posted by mpeirce The expenses are way to low to be used as a tax deduction - at least up to now, but I do keep all my old tax returns (PDF files I get from the CPA). So the insurance company sends me printouts of my non-covered expenses (which I scan and keep) and my tax return shows that I didn't take them as a tax deduction. I think I'm good to go by just keeping the old PDF files around for the next 25 years...

unless the insurance printouts also show you paid your share of the bills, you will need receipts/statements from the docs offices to show that you paid the bills. My insurance statements only show my share, not that I paid them.

[MichaelB]

Quote:

Originally Posted by kaneohe That means copies of your tax returns to show you either didn't take a deduction or that you did and the supporting receipts for those......again that you actually paid and what it was for.

AFAIK only if you did not itemize medical expenses for deduction that year. If you did, the expense is not eligible for HSA withdrawal.

Quote:

Originally Posted by kaneohe unless the insurance printouts also show you paid your share of the bills, you will need receipts/statements from the docs offices to show that you paid the bills. My insurance statements only show my share, not that I paid them.

Agree. The EOB together with a cancelled check, debit or credit card receipt should be sufficient.

[kaneohe]

Quote:

Originally Posted by MichaelB AFAIK only if you did not itemize medical expenses for deduction that year. If you did, the expense is not eligible for HSA withdrawal. .

Michael........suppose you have some old receipts from 2005 that you are using for HSA distributions. Perhaps you also itemized medical expenses also in 2005 ....but different ones from the ones you used for HSA distributions in a later year. IRS will want you to demonstrate that you didn't use the same ones for both purposes..........but agree with what you perhaps are thinking.....why would someone split up a years' bills to itemize some and not others.....perhaps not common , but possible.

[MichaelB]

Quote:

Originally Posted by kaneohe Michael........suppose you have some old receipts from 2005 that you are using for HSA distributions. Perhaps you also itemized medical expenses also in 2005 ....but different ones from the ones you used for HSA distributions in a later year. IRS will want you to demonstrate that you didn't use the same ones for both purposes..........but agree with what you perhaps are thinking.....why would someone split up a years' bills to itemize some and not others.....perhaps not common , but possible.

My prior post was not clear. Put another way, any medical expense included on a schedule A is not eligible for HSA withdrawal in that or any other year.

[kaneohe]

Quote:

Originally Posted by kaneohe Does she meet the income requirements for being a dependent.....< 3950 gross income (not including SS)?

for ChrisC re: MIL as dependent:

associated w/the income test was a footnote that I didn't check. Just in case it
might be relevant:

3)There is an exception if the person is disabled and has income from a sheltered workshop (exception to the gross income test......I'm assuming that means
no requirement but if it's relevant, pls doublecheck)

[bamsphd]

Quote:

Originally Posted by ChrisC ... I'm thinking that I need to eliminate the saved receipts issue that could plague my spouse. I have receipts dating back to 2008, when we first started the accounts. And we're switching HSA custodians in which I have all of my receipts stored electronically on its management tools.

I believe you can split your HSA balance across multiple HSA custodians. In your situation I would be really tempted to keep the current account open with just a minimum balance to maintain access to all those electronic records.

Last year was our first year with an HSA, but I decided to pay our routine medical bills with the HSA as we incurred the expenses. If we had a single multiple thousand dollar catastrophic expense, I might consider deferring that payment, but for little routine expenses saving, scanning, and spreadsheeting dryer sheets medical receipts is just not how I want to spend my retirement. I remember the pain of managing capital gain tax lots when I had mutual fund dividends directly reinvested, and I also have a variety of illegible faded receipts originally saved for warranties. Add in the problems of the DW trying to figure out what to do with old receipts after I pass, our current low tax bracket, and it just does not seem worth it for me.

[ChrisC]

Quote:

Originally Posted by bamsphd I believe you can split your HSA balance across multiple HSA custodians. In your situation I would be really tempted to keep the current account open with just a minimum balance to maintain access to all those electronic records.

I might have misspoken here. My current HSA custodian/administrator is JP Chase Morgan, which is transferring its administrator duties and accounts to HSA Bank. I believe the final details of this transfer will occur in June 2015 for account holders. I would hope that all electronic records and management tools transfer seamlessly. But one never knows until the ink is dried.

Quote:

Originally Posted by bamsphd Last year was our first year with an HSA, but I decided to pay our routine medical bills with the HSA as we incurred the expenses. If we had a single multiple thousand dollar catastrophic expense, I might consider deferring that payment, but for little routine expenses saving, scanning, and spreadsheeting dryer sheets medical receipts is just not how I want to spend my retirement. I remember the pain of managing capital gain tax lots when I had mutual fund dividends directly reinvested, and I also have a variety of illegible faded receipts originally saved for warranties. Add in the problems of the DW trying to figure out what to do with old receipts after I pass, our current low tax bracket, and it just does not seem worth it for me.

This is what is really driving me to start gradually paying qualified medical expenses from my HSA, especially since I think we will likely overfund the accounts, unless we're zapped by catastrophic illnesses or medical/dental problems not covered by our very good insurance coverage. I want to get it down to a manageable level so I'm hoping to reimburse myself for all of the qualified medical expenses we incurred in 2008 by the end of next week. It's not really that difficult for me to do this with Chase's Healthcare Spending Manager online tool, which I hope carries over to HSA Bank, the new custodian/administrator. If I don't do this and I predecease my wife, this would be a major headache for her.

[mpeirce]

> This is what is really driving me to start gradually paying qualified medical expenses from my HSA, especially since I think we will likely overfund the accounts

I don't know. There are a number of ways to spend money in an HSA even if you (or your spouse) have no records of previous medical expenses to use up:

- current year qualified medical expenses
- Medicare and other health care coverage if you were 65 or older

Worst case you can withdrawal money from an HSA after age 65 just like it's in an IRA - you pay regular taxes on the withdrawal. And there is no RMD requirement.

And since HSAs are a way to get money into an tax advantaged account even when you have no earned income, it's a pretty good deal.

The only downside I see is that if the HSA is inherited by a non-spouse it's counted as just a regular asset ("The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die").

Publication 969 (2013), Health Savings Accounts and Other Tax-Favored Health Plans

[MichaelB]

Quote:

Originally Posted by ChrisC I might have misspoken here. My current HSA custodian/administrator is JP Chase Morgan, which is transferring its administrator duties and accounts to HSA Bank. I believe the final details of this transfer will occur in June 2015 for account holders. I would hope that all electronic records and management tools transfer seamlessly. But one never knows until the ink is dried.

You've probably already done this but it's not a bad time to make sure you have up to date backup records.