For HSA Receipt Savers

[kaneohe]

No big tragedy, I suppose, if you end up w/ excess funds after age 65. You can always burn the excess but just pay ordinary income rates on non-medical expenses like a TIRA. Still it seems a bit of a waste paying those taxes when they could be used for qualified medical expenses tax free. Past 65, it is possible that the only expenses you can reimburse (medical) are for Medicare (now perhaps 2.5K for pt B and perhaps another 1K for pt D for a couple). Yes , you might get old and feeble but w/ a good supplement plan (like F), there may be not be any out of pocket charges to be reimbursed.

Seems like a bit tricky walking the middle path between too much and too little w/o a crystal ball...........................

[ChrisC]

Quote:

Originally Posted by audreyh1 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.

My spouse would be able to absorb my HSA into her HSA if I'm 6 feet under, but not sure she's going to be able to exhaust the HSA as well. (We have no other dependents now, though my 95 year old MIL might be moving in with us sometime this year -- though she fiercely wants to keep her independent living lifestyle and so it's not a done deal that she'll ever be our dependent.) I have 4 more years of HSA eligibility and my wife has another 2 years (but she's drafting on my HDHP and only makes catch-up contributions). 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.

[sengsational]

Even though I didn't scan anything, I have spent way too much time this year keeping HSA eligible expense receipts and maintaining a spreadsheet. I printed the spreadsheet, punched holes in all of it, and am going to buy an Acco report cover and stick it on the shelf. No scanning for me...too much time. I'll back-up the spreadsheet and if the place burns down and I get audited (a real unlucky guy, n'est-ce pas?), I'll just bring the spreadsheet from the backup to the audit, along with a picture of the smothering reckage, and hope for the best.

One more thing...the spreadsheet is NOT just for HSA purposes...it's also for tracking medical expenses so that I can model various health insurance options. The expenses are identified as medical, dental, rx, preventive, which family member, etc. If one presumes that past experience is a decent indication of future medical utilization, then having quick access to these totals means being a more effective health insurance shopper.

[travelover]

Quote:

Originally Posted by ChrisC My spouse would be able to absorb my HSA into her HSA if I'm 6 feet under, but not sure she's going to be able to exhaust the HSA as well.........

If I die with too much money, I die happy. The money in my HSA has been untaxed while I'm living, so that will have made sure that I had the maximum amount of money available, if I or DW needed it. Beyond that, screw it............

[MichaelB]

We itemize our medical expenses so we keep the receipts together with tax return and will toss them when cleaning out the returns. Once Medicare starts I'm not sure if we will have enough to itemize so HSA withdrawal becomes a possibility.

[kaneohe]

Quote:

Originally Posted by ChrisC My spouse would be able to absorb my HSA into her HSA if I'm 6 feet under, but not sure she's going to be able to exhaust the HSA as well. .

and what happens to your stack of receipts that contain your own past expenses?
My impression is that she can't use them for reimbursements from her HSA because they are your expenses. I think there used to be a transitional rule that allowed your current yr expenses within a certain short time period but I'm not sure that exists anymore.

[audreyh1]

Quote:

Originally Posted by kaneohe No big tragedy, I suppose, if you end up w/ excess funds after age 65. You can always burn the excess but just pay ordinary income rates on non-medical expenses like a TIRA. Still it seems a bit of a waste paying those taxes when they could be used for qualified medical expenses tax free. Past 65, it is possible that the only expenses you can reimburse (medical) are for Medicare (now perhaps 2.5K for pt B and perhaps another 1K for pt D for a couple). Yes , you might get old and feeble but w/ a good supplement plan (like F), there may be not be any out of pocket charges to be reimbursed. Seems like a bit tricky walking the middle path between too much and too little w/o a crystal ball...........................

Lots of potential dental and eye expenses after 65. Those aren't covered by Medicare. People may still run into deductibles. Some long term care expenses are eligible.

[Animorph]

There will be a period later in retirement when we should be drawing down our Roth IRA's to stay in a lower tax bracket. At that point, the HSA goes first, using accumulated receipts and current medical expenses. Hopefully we can spend the HSA's down to zero before using the Roth IRA's, getting rid of the restricted money before the unrestricted. On the other hand, it would be nice not to have spent that much on medical expenses by then.

[ChrisC]

Quote:

Originally Posted by kaneohe and what happens to your stack of receipts that contain your own past expenses? My impression is that she can't use them for reimbursements from her HSA because they are your expenses. I think there used to be a transitional rule that allowed your current yr expenses within a certain short time period but I'm not sure that exists anymore.

I was under the impression that she would be able to cash out those prior expenses (which include her two knee replacement surgeries). While I'm alive, my HSA can reimburse my medical expenses as well as her medical expenses, and her HSA can do the same, though we've scored all of our family medical expenses on my HSA spreadsheets. If she inherits my HSA, I know of no rule that precludes her from using the combined HSA (my old account which became added to hers) to cover my past medical expenses. I think the transitional rule you mentioned is for a non-spouse beneficiary of an inherited HSA, where a one year rule applies to cash out/reimburse expenses of the decedent after the original account holder died. http://www.irs.gov/pub/irs-pdf/p969.pdf

[growerVon]

Premera through DW's and my megacorp has a site that keeps track of non-HSA payments against deductibles and co-insurance payments into an "HSA Save-It" record, automatically. Considering the manually alternative, I'm thankful for this.

[kaneohe]

Quote:

Originally Posted by ChrisC I was under the impression that she would be able to cash out those prior expenses (which include her two knee replacement surgeries). While I'm alive, my HSA can reimburse my medical expenses as well as her medical expenses, and her HSA can do the same, though we've scored all of our family medical expenses on my HSA spreadsheets. If she inherits my HSA, I know of no rule that precludes her from using the combined HSA (my old account which became added to hers) to cover my past medical expenses. I think the transitional rule you mentioned is for a non-spouse beneficiary of an inherited HSA, where a one year rule applies to cash out/reimburse expenses of the decedent after the original account holder died. http://www.irs.gov/pub/irs-pdf/p969.pdf

ChrisC......I don't know the answer here......I brought it up as something to be concerned about.

I checked that link you provided...........it is not clear to me what it means.
"It will be treated as your spouse's HSA after your death." To me that sounds like it can reimburse your spouse's expenses only.

And the transitional rule under TIP.....not clear to me what that means either.
Organizationally it seems to be grouped w/ non-spouse beneficiary but the words say "any beneficiary but estate" so my guess would have been that it
applies for spousal beneficiary also so only recent charges paid could be reimbursed from the HSA.

************************************************** *************
Spouse is the designated beneficiary. If your spouse
is the designated beneficiary of your HSA, it will be treated
as your spouse's HSA after your death.

Spouse is not the designated beneficiary. If your
spouse is not the designated beneficiary of your HSA:
The account stops being an HSA, and
The fair market value of the HSA becomes taxable to
the beneficiary in the year in which you die.
If your estate is the beneficiary, the value is included on
your final income tax return.

TIP:
The amount taxable to a beneficiary other than
the estate is reduced by any qualified medical expenses
for the decedent that are paid by the beneficiary
within 1 year after the date of death.

[kaneohe]

Fairmark Forum :: Retirement Savings and Benefits :: HSA non-spouse beneficiary

fwiw...........I had forgotten about this. It starts out about non-spousal beneficiaries of HSA but at the end switches to spousal. For those energetic to slug your way through, see what you think. To me it was a murky...maybe.

[MooreBonds]

Quote:

Originally Posted by ChrisC My spouse would be able to absorb my HSA into her HSA if I'm 6 feet under, but not sure she's going to be able to exhaust the HSA as well. (We have no other dependents now, though my 95 year old MIL might be moving in with us sometime this year -- though she fiercely wants to keep her independent living lifestyle and so it's not a done deal that she'll ever be our dependent.)

Couldn't tell from your post above if you had this in mind, but if your MIL qualifies as your dependent, then couldn't her medical expenses qualify for allowable HSA withdrawals?

[ChrisC]

Quote:

Originally Posted by kaneohe ChrisC......I don't know the answer here......I brought it up as something to be concerned about. I checked that link you provided...........it is not clear to me what it means. "It will be treated as your spouse's HSA after your death." To me that sounds like it can reimburse your spouse's expenses only.

I'm not really concerned. I don't read that language to imply that one cannot reimburse qualified medical expenses incurred by the prior holder of the account. It simply says that going forward, after death of the account holder, the spouse that inherits the HSA can treat the account as her own HSA. This to me, simply means, that she can merge the account into her own HSA if she had her own account (or have the account designated in her own name if she didn't have her own account before) and pay for medical expenses that she and her dependents incur. It's a stretch to say there is a prohibition not to pay prior expenses of the decedent (and his family, including the decedent's wife or children) that obviously occurred before the account could now be treated as the surviving spouse's HSA. The implication you read from the IRS Publication would permit the surviving spouse to cover medical expenses she incurred under the umbrella of her decedent's spouse's HSA but not her children or her deceased spouse! Makes no sense. Rules, regulations and guidance provided by the IRS are generally interpreted to yield sensible, not baffling or illogical, results.

I also read the link you provided in your other post. Didn't see anything there that alters my impression. But I do agree with you that it's not the clearest guidance provided by the IRS. No less an authority as the Bogelheads wiki on this subject appears to agree with you that the issue is from clear as I think it is, given the fact that we ought to be interpreting the language in a common sensible manner. https://www.bogleheads.org/wiki/Health_savings_account

But the worse that could happen, assuming I haven't caught up with reimbursing all my prior qualified medical expenses, is that my surviving spouse has an oversized HSA and that some distributions will be treated as ordinary income to her. I guess what I will do in the next few years is accelerate the reimbursement process for me. I'm really more concerned about the paper trail issues rather than her not being able to reimburse prior medical expenses that occurred on my watch.

[ChrisC]

Quote:

Originally Posted by MooreBonds Couldn't tell from your post above if you had this in mind, but if your MIL qualifies as your dependent, then couldn't her medical expenses qualify for allowable HSA withdrawals?

Yes that was the plan. Though my MIL has excellent insurance coverage and her uninsured, qualified medical expenses would be very low.

[kaneohe]

Quote:

Originally Posted by MooreBonds Couldn't tell from your post above if you had this in mind, but if your MIL qualifies as your dependent, then couldn't her medical expenses qualify for allowable HSA withdrawals?

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

[ChrisC]

Quote:

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

Probably not. Thanks for pointing this out to me. Didn't know there was a gross income test.

[kaneohe]

I'm

Quote:

Originally Posted by ChrisC . No less an authority as the Bogelheads wiki on this subject appears to agree with you that the issue is from clear as I think it is, given the fact that we ought to be interpreting the language in a common sensible manner. https://www.bogleheads.org/wiki/Health_savings_account

Thanks for that link......agree w/ you........

[kaneohe]

A more recent answer from Alan S. perhaps clearer than before
Fairmark Forum :: Retirement Savings and Benefits :: HSA--Spouse Inherits..old receipts

[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 they 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.