Join Early Retirement Today
Reply
 
Thread Tools Display Modes
For HSA Receipt Savers
Old 01-22-2015, 08:43 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 4,172
For HSA Receipt Savers

from the Bogleheads forum, an interesting thread about HSA receipt savers.....
one fellow does an analysis of the amount gained by not using HSA funds vs paying with HSA funds annually. The benefit is surprising small although still there. Of course it assumes that if you pay from the HSA that you invest the equivalent amount in a taxable account instead of spending it......perhaps, for some an un-natural forced savings unlike keeping it all in the HSA.
https://www.bogleheads.org/forum/vie...p?f=1&t=156240
kaneohe is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-22-2015, 08:47 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 14,328
I put the max into my HSA each year and don't have nearly that much in medical and dental expenses. So, I just invest it in Vanguard's Total Stock Market inside the HSA. Once I hit Medicare, I'll take it out in big chunks to pay for premiums, so all the little receipts between now and then probably are not worth saving.
travelover is offline   Reply With Quote
Old 01-22-2015, 09:25 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 3,876
Quote:
Originally Posted by kaneohe View Post
one fellow does an analysis of the amount gained by not using HSA funds vs paying with HSA funds annually. The benefit is surprising small
That poster forgot to include the tax deduction associated with contributing to an HSA. After doing so, the HSA comes out further ahead.
GrayHare is offline   Reply With Quote
Old 01-22-2015, 09:32 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
An HSA is a good way to have additional tax-deferred savings. The question is when one should start to use it for medical expenses.

Same as Travelover, I anticipate plenty of chances to use it in the years ahead, hence keep no receipts for past expenses. However, I can see that younger people who defer the claims may want to keep receipts so that they can tap it in an emergency by making claims against past expenses. My HSA is not that much compared to other accounts that I have, so it is not worth the hassle of saving receipts.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)

"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is offline   Reply With Quote
Old 01-22-2015, 09:35 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 14,328
Quote:
Originally Posted by NW-Bound View Post
An HSA is a good way to have additional tax-deferred savings. The question is when one should start to use it for medical expenses.

Same as Travelover, I anticipate plenty of chances to use it in the years ahead, hence keep no receipts for past expenses. However, I can see that younger people who defer the claims may want to keep receipts so that they can tap it in an emergency by making claims against past expenses. My HSA is not that much compared to other accounts that I have, so it is not worth the hassle of saving receipts.
I actually do save the receipts, but loose in a folder and if I ever need to prove to the IRS that I actually spent it on medical expenses, I could put together a spread sheet pretty quick.
travelover is offline   Reply With Quote
Old 01-22-2015, 09:44 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
Quote:
Originally Posted by GrayHare View Post
That poster forgot to include the tax deduction associated with contributing to an HSA. After doing so, the HSA comes out further ahead.
According to my estimates, contributing to our HSA will save us over $2500 in taxes for 2014.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 01-22-2015, 09:47 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
Quote:
Originally Posted by NW-Bound View Post
An HSA is a good way to have additional tax-deferred savings. The question is when one should start to use it for medical expenses.

Same as Travelover, I anticipate plenty of chances to use it in the years ahead, hence keep no receipts for past expenses. However, I can see that younger people who defer the claims may want to keep receipts so that they can tap it in an emergency by making claims against past expenses. My HSA is not that much compared to other accounts that I have, so it is not worth the hassle of saving receipts.
We intend to use it for reimbursing paid Medicare premiums (part B and D) when we are no longer eligible to contribute to the HSA. And it is invested accordingly.

But I'm still keeping records of HSA eligible current expenses. After a year they are already a pain, but I do have electronic copies and a hardcopy folder. I could organize a bit better, but haven't put in the time to do so yet.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 01-22-2015, 09:50 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 3,679
Over the weekend I just organized all my receipts for 2014s medical expenses. We put $7550 in the HSA, had large medical expenses (total hip replacement) paid from regular savings and I have withdrawn $3500 from the HSA. I'm planning on reimbursing ourselves with another another large hunk soon and then using it to make a contribution for 2015.

I made a spreadsheet to show all of our actual expenses (provider billing statement or receipt) including the date and method of payment. This includes our medical deductible and our dental expenses (no dental insurance). In the folder with the spreadsheet is also a copy of the bank or credit card statement showing the payment.

I tried to anticipate what someone would want to see in an audit. I can't imagine someone bothering to audit us as our income and tax liability are a tiny blip in the bigger picture of the IRS revenue stream, but you never know!

2014 was our first year with an HSA. The $7550 contribution gets us a $755 reduction in taxes. The reduced income for the ACA subsidy gets us and additional $792 and the account has grown by $294 for a total of a benefit of $1841 for having the HSA in 2014.
__________________
Married, both 69. DH retired June, 2010. I have a pleasant little part time job.
Sue J is offline   Reply With Quote
Old 01-22-2015, 09:51 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
Quote:
Originally Posted by kaneohe View Post
from the Bogleheads forum, an interesting thread about HSA receipt savers.....
one fellow does an analysis of the amount gained by not using HSA funds vs paying with HSA funds annually. The benefit is surprising small although still there. Of course it assumes that if you pay from the HSA that you invest the equivalent amount in a taxable account instead of spending it......perhaps, for some an un-natural forced savings unlike keeping it all in the HSA.
https://www.bogleheads.org/forum/vie...p?f=1&t=156240
That was a useful link, thanks. It was good to see what people really had to produce if asked on the paperwork.

Maintaining a log is probably a really good idea in addition to having copies of receipts and proof of payment.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 01-22-2015, 09:58 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 9,343
Quote:
Originally Posted by audreyh1 View Post
According to my estimates, contributing to our HSA will save us over $2500 in taxes for 2014.

I am late to HSA game only getting to start one after I retired 5 years ago. Being single my tax savings right at $1000 yearly. I have no health costs and if I get lucky and make it to 65 that way I should have around $150k. Since I annually buy safe preferred investment grade stocks with this money each year earning 6-7% I could possibly crank out 9k or so yearly in tax free income to help pay for my future maladies. This income will also avoid the 31% in annual taxes I pay if I do not need it that year. So for me, I believe it to be a valuable tool long term provided I stay healthy.


Sent from my iPad using Tapatalk
Mulligan is offline   Reply With Quote
Old 01-22-2015, 09:58 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 4,172
Quote:
Originally Posted by GrayHare View Post
That poster forgot to include the tax deduction associated with contributing to an HSA. After doing so, the HSA comes out further ahead.
He was comparing HSA with no reimbursements to HSA with annual reimbursements. Deduction in both cases so need to take that into account.
kaneohe is offline   Reply With Quote
Old 01-22-2015, 10:01 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 4,172
Quote:
Originally Posted by travelover View Post
I actually do save the receipts, but loose in a folder and if I ever need to prove to the IRS that I actually spent it on medical expenses, I could put together a spread sheet pretty quick.
Have you never had a receipt fade to illegibility?
kaneohe is offline   Reply With Quote
Old 01-22-2015, 10:02 AM   #13
Recycles dryer sheets
 
Join Date: Oct 2010
Posts: 392
We don't touch ours. We get high deductible health insurance plans and only plan to touch the money if/when someone gets really ill. For example, if we need some chemo that is one of the expensive drugs that costs thousands a month. If feels good to have it there. I think we have 20K. No longer working so it won't grow that quick.
BellBarbara is offline   Reply With Quote
Old 01-22-2015, 10:05 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 3,876
Quote:
Originally Posted by kaneohe View Post
He was comparing HSA with no reimbursements to HSA with annual reimbursements. Deduction in both cases so need to take that into account.
Hmm, then I'll have to run my own calculations since on the surface it appears an HSA's tax-free growth should give it a decent advantage over time.
GrayHare is offline   Reply With Quote
Old 01-22-2015, 10:36 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 3,876
OK, in his example I see no accounting for the tax pending on the growth of the money put into a non-HSA account rather than the HSA. He arrives at $42,485 in his non-HSA account, but he does not deduct the taxes pending on its growth.

When I run similar calculations using his growth %, after 20 years with solely HSA I have $146948 available for medical expenses, but only $127586.2 (after 20% CG tax) with his HSA+non-HSA approach. The HSA is ahead by almost $1000 per year.
GrayHare is offline   Reply With Quote
Old 01-22-2015, 11:08 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 4,172
Quote:
Originally Posted by GrayHare View Post
OK, in his example I see no accounting for the tax pending on the growth of the money put into a non-HSA account rather than the HSA. He arrives at $42,485 in his non-HSA account, but he does not deduct the taxes pending on its growth.

When I run similar calculations using his growth %, after 20 years with solely HSA I have $146948 available for medical expenses, but only $127586.2 (after 20% CG tax) with his HSA+non-HSA approach. The HSA is ahead by almost $1000 per year.
He got a 1.4K delta ignoring the tax on the taxable account. The taxable acct had 42.5 value with 20K basis for CG of 22.5K. With 20% CG tax of 4.5K, wouldn't your delta be 4.5+ 1.4 = 5.9K? He said he ignored CG tax because it was ymmv .....could be 0% to 20%+
kaneohe is offline   Reply With Quote
Old 01-22-2015, 11:19 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 3,876
Quote:
Originally Posted by kaneohe View Post
He got a 1.4K delta ignoring the tax on the taxable account. The taxable acct had 42.5 value with 20K basis for CG of 22.5K. With 20% CG tax of 4.5K, wouldn't your delta be 4.5+ 1.4 = 5.9K? He said he ignored CG tax because it was ymmv .....could be 0% to 20%+
Good catch, yes, my $127586.2 should have been $141077.8, roughly the $5.9k delta you suggest, or about $300 per year more money with the HSA. The higher the CG rate the more the HSA comes out ahead; at a 0% CG rate the delta is small.
GrayHare is offline   Reply With Quote
Old 01-22-2015, 01:01 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 14,328
Quote:
Originally Posted by kaneohe View Post
Have you never had a receipt fade to illegibility?
Let me rummage around in the bottom of the shoebox and get back to you.

But seriously, I'll probably exhaust it with Medicare payments in big chunks, and even then, I'd only need receipts if I was audited.
travelover is offline   Reply With Quote
Old 01-22-2015, 02:47 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 1,074
Quote:
Originally Posted by travelover View Post
Let me rummage around in the bottom of the shoebox and get back to you.

But seriously, I'll probably exhaust it with Medicare payments in big chunks, and even then, I'd only need receipts if I was audited.
Really? I once thought that with current payments for LTCi premiums, Medicare -Part B, when I get 65, and other medical expenses that I would easily exhaust my HSA in my 80's. We now have $75K in our HSAs before making this year's maximum family and catch-up contribution and have around $41K in qualified medical expenses, which includes $18K in LTCi premiums and major dental care and replacement knee surgeries. Two years ago, I decided to draw down on my HSA and pay for current LTCi premium payments. Last year, I reimbursed myself for a few other current expenses -- I still have $36K in unreimbursed medical expenses.

I'm glad to have this problem. But I'm thinking that I'm going to hasten the reimbursement process for us. I'd hate to leave files of saved receipts for someone else (my spouse or children) to seek reimbursement later, in case I'm not around.
__________________
Someday this war's gonna end . . .
ChrisC is offline   Reply With Quote
Old 01-22-2015, 02:50 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
Quote:
Originally Posted by ChrisC View Post
Really? I once thought that with current payments for LTCi premiums, Medicare -Part B, when I get 65, and other medical expenses that I would easily exhaust my HSA in my 80's. We now have $75K in our HSAs before making this year's maximum family and catch-up contribution and have around $41K in qualified medical expenses, which includes $18K in LTCi premiums and major dental care and replacement knee surgeries. Two years ago, I decided to draw down on my HSA and pay for current LTCi premium payments. Last year, I reimbursed myself for a few other current expenses -- I still have $36K in unreimbursed medical expenses.

I'm glad to have this problem. But I'm thinking that I'm going to hasten the reimbursement process for us. I'd hate to leave files of saved receipts for someone else (my spouse or children) to seek reimbursement later, in case I'm not around.
Can't your spouse use it for their own medical expenses if you aren't around? (and for paying children's expenses as well if they are dependents)

If my HSA got that big I'd use it too. But we just now have HSA compatible insurance, and DH is only 5 years from Medicare and me 10. So we don't have that long to accumulate tax-deferred savings to apply against future medical expenses.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Transferring HSA money to a new HSA account Mulligan FIRE and Money 13 06-27-2014 08:26 PM
Ok... Which one of you dropped your ATM Receipt? chinaco FIRE and Money 29 07-03-2011 10:17 PM
airborne--get back up to $60 bucks no receipt - sept 15 deadline lazygood4nothinbum Other topics 2 03-04-2008 06:27 PM
Best Savers in NJ REWahoo FIRE and Money 13 12-14-2005 04:41 AM

» Quick Links

 
All times are GMT -6. The time now is 04:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.