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Old 02-25-2021, 12:43 PM   #41
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We also keep all of our EOBs, bills and receipts and at the end of the year I make a list and come up with the total for the year. We have receipts now from 2015-2020. It occurs to me that we should really have them in a fire proof safe, as they represent money in the bank, if we ever need some extra cash without effecting our ACA cliff and without dipping into Roths. Otherwise our plan is to use the HSA money for Medicare premiums.
My greater worry was that something would happen to me and neither DW nor DD would know of the opportunity to withdraw HSA money tax free and the money would ultimately be taxed when DD or DS inherit it.

Once I withdrew 2010-2019, I no longer had to worry so much about it and the money was in my checking account to be used for Medicare premiums or hookers.

Now all I need to worry about is withdrawing the last year's eligible expenses each year.
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Old 02-25-2021, 12:53 PM   #42
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On the trophy wife thing, it isn't always derogatory. It certainly is where the trophy wife is a much younger, very attractive bimbo... but there are other cases where the trophy wife is much younger, very attractive but also very smart and talented and the term is more envy of the lucky husband than derogatory. And the sometimes it is just in jest. Anyway, my 2 cents.
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Old 02-25-2021, 01:03 PM   #43
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I won't be using the term again anytime soon.
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Old 02-26-2021, 05:25 PM   #44
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You left out tax free on death too. Like any other IRA. HSA is essentially tax free magic from first contribution until beyond the grave.
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Old 02-26-2021, 05:27 PM   #45
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You left out tax free on death too. Like any other IRA. HSA is essentially tax free magic from first contribution until beyond the grave.
That is not my understanding. As discussed in this thread, on my death, the HSA can go to my wife and it becomes her HSA.

If it went to my kid instead, the whole amount is treated as taxable income the year I die.

Did I get that wrong?
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Old 02-26-2021, 05:32 PM   #46
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My understanding is that transfer is taxfree. It does not maintain taxfree status, but there are no taxes on transfer. just like ira.
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Old 02-26-2021, 05:36 PM   #47
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I'm not a tax lawyer or a CPA, but I don't get that sense at all. Rules are different for spouse vs others (which is why I changed the PoD beneficiary based on information I learned in this thread).

Edit: main difference for non-spouse may be the "stretch." In any case, different rules for sure.
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Old 02-26-2021, 05:53 PM   #48
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Hopefully you've been saving those medical receipts for the last 10 years, so that you can make a tax-free withdrawal.
This is a great point and worth putting into action no matter where you are towards retirement. Hold onto the health receipts and you can use them down the road. It doesn't matter holding the paper or, if you are comfortable using a computer, scanning them and keep easy access to them very easily. My dorky-self has folders:
HSA > DW > 2019 or 2020 or 2021...
HSA > Myself > 2019 or 2020 or 2021...
In the main HSA folder is one Excel document that keeps track of all the documents in each folder with columns: Date; Company/Dr; Description; Cost... and a Total cost at the top that adds them up. Also, it has separate spreadsheets for each year.

Attached is the Excel HSA Template you can build your own documentation from (whether holding the paper receipts or scanning them)

Edit: Downloaded the attached document and you might need to redo the Total costs for each person in cell D1 to: =SUM(D31048576) and cell I1 to: =SUM(I3:I1048576)
Attached Files
File Type: xls HSA Template.xls (9.0 KB, 6 views)
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Old 02-26-2021, 05:55 PM   #49
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One thing to keep in mind--if you itemize on your taxes and have taken a deduction for medical expenses then you cannot also take those same medical expenses out of your HSA.
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Old 02-26-2021, 05:57 PM   #50
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Whoa. So I need to track expenses in non-itemized years vs itemized years? My life was so simple before this thread.
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Old 02-26-2021, 06:03 PM   #51
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My understanding is that transfer is taxfree. It does not maintain taxfree status, but there are no taxes on transfer. just like ira.
If anyone but your spouse inherits it, it's transferred to a taxable account, and it is all taxable income. There's no magic with that. Google "inheriting an HSA". Best to try to not die with an HSA balance and no spouse.
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Old 02-26-2021, 06:08 PM   #52
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If you use Quicken or similar, a spreadsheet of medical costs for any period can be produced quite readily. And if you transact in details then the credit card receipts and checks will follow the spreadsheet. If you also make a habit to download the EOBs from your insurance provider as appropriate and keep any receipts for uninsured items such as dental if applicable, then you have a pretty good level of detail.

I try to have bills particularly for large expenses also but the above is a pretty good start, without lots of effort.
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Old 02-26-2021, 07:44 PM   #53
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We are continuing to contribute to our HSA for (a) the tax deduction and (b) future Medicare premium payments, as we will be subject to the IRMAA surcharge. We have a shorter runway since DW turns 65 near the end of 2022 and I turn 65 in 2023.

I have always tracked our expenses vis our EOB forms, as in days of yore if you had a Flexible Spending Account (FSA) Megacorp required you to turn in EOBs for reimbursement. When we became eligible for an HSA I just continued the practice. My health insurance providers keep them inline for a number of years, so at the beginning of the year I download the EOBs for the previous year and store them away. Also, more of our providers are providing receipts via email (direct or PDF attachments), so those are easy to file away.

I reimbursed myself for one year when we were not eligible to use them in itemized deductions, but it was a small amount. Based on information I received from another thread, my strategy now is to leave the HSA to grow and use our medical expenses for tax deductions (since with them our itemized deductions exceed the standard deduction). We are fortunate so far that our medical expenses have been far less in retirement than we planned for. But as with any strategy I look at it yearly to determine if it needs any tweaking.

P.S. Since DW kept working after I retired, more than a few of her friends and acquaintances assumed she had to work since I was no longer working. I told her to tell them I am now a "kept man" if that comes up, and she has. So far the PC police haven't dragged us out of the house and sent us to rehabilitation school .
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Old 02-26-2021, 08:12 PM   #54
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You left out tax free on death too. Like any other IRA. HSA is essentially tax free magic from first contribution until beyond the grave.
No, not tax free on death. It can transfer tax-free to a surviving spouse, but if inherited by a non-spouse then it is taxable... that is one of the reasons that I am using mine now and not letting it grow too big.
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Old 02-26-2021, 08:13 PM   #55
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That is not my understanding. As discussed in this thread, on my death, the HSA can go to my wife and it becomes her HSA.

If it went to my kid instead, the whole amount is treated as taxable income the year I die.

Did I get that wrong?
No, you have it right.
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Old 02-26-2021, 08:16 PM   #56
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My understanding is that transfer is taxfree. It does not maintain taxfree status, but there are no taxes on transfer. just like ira.
No, you are wrong. If you are a non-spouse beneficiary whatever you inherit is income in the year that you inherit it.

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If your beneficiary is a person but not your spouse, the account will be changed to a taxable account in the name of that beneficiary and the full value becomes taxable to your beneficiary in the year of your death. This transfer is completed free of probate. The amount taxable to a nonspouse beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within one year after the date of death.
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Old 02-26-2021, 08:21 PM   #57
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Whoa. So I need to track expenses in non-itemized years vs itemized years? My life was so simple before this thread.
Not usually a huge issue because very few people can typically itemize medical deductions since in order to get any benefit they must exceed 10% 7.5% of income... and also, fewer people itemize these days anyway.
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Old 02-26-2021, 08:27 PM   #58
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...Based on information I received from another thread, my strategy now is to leave the HSA to grow and use our medical expenses for tax deductions (since with them our itemized deductions exceed the standard deduction). We are fortunate so far that our medical expenses have been far less in retirement than we planned for. ...
I'm confused.... you can only deduct the portion of medical expenses above 10% 7.5% of AGI... so if you have $100k of AGI then you would need over $10k $7.5k of eligible medical expenses to get any benefit... if you had $10k of medical expenses only $2.5k is included in itemized deductions.

If your medical expenses are far less than you planned for are you really getting a benefit from them worth itemizing?

https://hsastore.com/learn/taxes/ite...edical-expense
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Old 02-26-2021, 08:41 PM   #59
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@pb4uski insurance premia are deductible medical expenses when you itemize, even though you can't use your HSA for them.
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Old 02-26-2021, 08:48 PM   #60
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I'm confused.... you can only deduct the portion of medical expenses above 10% of AGI...
It's down to 7.5% now.
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