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Pay Provider or reimburse yourself from the HSA?
Old 01-12-2020, 12:40 PM   #1
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Pay Provider or reimburse yourself from the HSA?

I am thinking about paying for medical expenses with a credit card to earn rewards and then reimbursing yourself from the HSA. Are there any disadvantages?
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Old 01-12-2020, 12:44 PM   #2
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I always pay myself first and foremost, then pay the provider. Easier for me to keep track as I only pay off EOB, not the hospital/doctor statement. If there's a difference I figure it out before I pay anyone. Automatic deposit right into my checking account, then pay the provider via CC and get the points. No downside IMHO.
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Old 01-12-2020, 12:45 PM   #3
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Well, that money has to come from somewhere, which means it drives up the costs for everyone.
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Old 01-12-2020, 12:48 PM   #4
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Well, that money has to come from somewhere, which means it drives up the costs for everyone.
?
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Old 01-12-2020, 01:10 PM   #5
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I am thinking about paying for medical expenses with a credit card to earn rewards and then reimbursing yourself from the HSA. Are there any disadvantages?
No disadvantages. Besides earning rewards, because medical expenses often aren't final at the time of payment, if you pay from the HSA right then and there, and it turns out to be too high, getting the money back into the HSA will be a hassle.
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Old 01-12-2020, 01:18 PM   #6
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I am thinking about paying for medical expenses with a credit card to earn rewards and then reimbursing yourself from the HSA. Are there any disadvantages?
No, it sounds smart to me. Also, once you receive the bill, call the provider and ask if they offer an additional discount to you if your pay right then and there by credit card.... I've received 10-15% discounts plus the 2% that I get from the credit card company.

The only dilemma that it creates for me though is whether when I withdraw from the HSA should I use the $100 EOB amount or the $90 or $85 amount that I actually paid.
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Old 01-12-2020, 01:23 PM   #7
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I have personally never got to the withdrawing the money from HSA, yet. Money is fungible. I am just keeping the receipts over the past many years and will continue to let the HSA money which is invested continue to ride.
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Old 01-12-2020, 01:25 PM   #8
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I pay all mine out of pocket (with rewards card) and let my HSA balance grow... I view it as an insurance policy and hope to not touch it for many years. I should be able to handle my max out of pocket for quite a while, even after I FIRE myself. If I needed the cash, I would reimburse myself but have not had to do so yet.
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Old 01-12-2020, 01:27 PM   #9
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No, it sounds smart to me. Also, once you receive the bill, call the provider and ask if they offer an additional discount to you if your pay right then and there by credit card.... I've received 10-15% discounts plus the 2% that I get from the credit card company.
That's interesting, never tried that. I don't want the HSA police to come knocking.
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Old 01-12-2020, 01:28 PM   #10
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I am thinking about paying for medical expenses with a credit card to earn rewards and then reimbursing yourself from the HSA. Are there any disadvantages?
No. This is how we do it. In fact, the terms of DH's insurance prohibit most providers from collecting money from us at the time of service. They have to bill the insurance first, then send a bill if any money is due, which I compare to the EOB before paying.

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The only dilemma that it creates for me though is whether when I withdraw from the HSA should I use the $100 EOB amount or the $90 or $85 amount that I actually paid.
If the IRS were to ask you to substantiate your reimbursements, do you think they'd allow $100 or the $90 or $85 you actually paid as shown on your CC bill/receipt? I'd guess the latter.
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Old 01-12-2020, 01:39 PM   #11
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That's interesting, never tried that. I don't want the HSA police to come knocking.
There is nothing wrong with it at all... the only question is whether you can take out of your HSA the EOB amount or the lower amount that you actually paid.... while I would like it to be the former I suspect it is really the latter... but in any event I benefit from the discount.
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Old 01-12-2020, 01:41 PM   #12
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.... The only dilemma that it creates for me though is whether when I withdraw from the HSA should I use the $100 EOB amount or the $90 or $85 amount that I actually paid.
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....If the IRS were to ask you to substantiate your reimbursements, do you think they'd allow $100 or the $90 or $85 you actually paid as shown on your CC bill/receipt? I'd guess the latter.
That is my guess too, though I would prefer that it the former. I can't find anything specifically on point though.
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Old 01-12-2020, 01:50 PM   #13
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That is my guess too, though I would prefer that it the former. I can't find anything specifically on point though.
My concern is the backup ppwk. You could explain it in the notes in the HSA account as backup. Is the insurance company aware of the discount or do they care? Nothing wrong with getting an extra discount on top of insurance discount.
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Old 01-12-2020, 02:01 PM   #14
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I use my HSA like a super IRA. Tax free going in and going out. I have it invested in stocks at Fidelity and have just let it grow. At some point, I'll have large medical bills and I'll pull it out then.
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Old 01-12-2020, 02:14 PM   #15
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My concern is the backup ppwk. You could explain it in the notes in the HSA account as backup. Is the insurance company aware of the discount or do they care? Nothing wrong with getting an extra discount on top of insurance discount.
I don't get the first two sentences of your post.

To my knowledge, the insurer isn't aware that the provider offered me an additional discount.... but even if they did know I doubt that they would care... they paid their contractual amount.

I don't think what I did is very uncommon... we've talked about discounts for immediate payment often on this forum.
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Old 01-12-2020, 02:24 PM   #16
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I don't get the first two sentences of your post.

To my knowledge, the insurer isn't aware that the provider offered me an additional discount.... but even if they did know I doubt that they would care... they paid their contractual amount.

I don't think what I did is very uncommon... we've talked about discounts for immediate payment often on this forum.
I have never been audited. One of my fears. Say I get audited and the hospital statement or EOB back up paperwork shows a different amount than what I paid. How do I show the correct amount, what I paid without some backup paperwork? If you say I don't need backup paperwork, I am throwing out years of tax documents that are taking up a crazy amount of space in our garage.
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Old 01-12-2020, 02:27 PM   #17
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For simplicity in reporting/record keeping we plan to pay our Medicare part B and part D premiums as billpay directly from our HSA account. We plan to spend our HSA accounts down before RMD age.
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Old 01-12-2020, 02:38 PM   #18
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I have personally never got to the withdrawing the money from HSA, yet. Money is fungible. I am just keeping the receipts over the past many years and will continue to let the HSA money which is invested continue to ride.
Same. Have not touched mine.
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Old 01-12-2020, 02:45 PM   #19
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Same. Have not touched mine.
Keeping it chaste?
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Old 01-12-2020, 03:04 PM   #20
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I've been documenting medical expenses for years since opening my HSA. I've only pulled $1000 out, when I realized I needed money for something in a hurry and this was the easiest source at the time to access.

Later on, I thought I saw something that you should also document that you actually paid the expense, didn't just get billed. No idea where, and I figure if they really want me to do that I'll fine old credit card statements to find them. If what I found was true, that would say you can only reimburse yourself the amount actually paid.

Eventually I'll reimburse myself. The HSA is a great account to have, but not a great one to inherit. I think heirs would actually be taxed on it, IIRC. They could pay your final medical bills, but I think that's it. This was covered in another thread somewhat recently.
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