Withdrawing from an HSA

[pb4uski]

The last part is easy for us as we've never been able to deduct medical expenses... never been over the AGI hurdle. I suspect this is the case for many people.

 

[audreyh1]

The last part is easy for us as we've never been able to deduct medical expenses... never been over the AGI hurdle. I suspect this is the case for many people.

Exactly! Only very long ago when DH had own business.

 

[RunningBum]

The last part is easy for us as we've never been able to deduct medical expenses... never been over the AGI hurdle. I suspect this is the case for many people.

I did one year, before the std deduction increased. Pretty low income, and expensive knee surgery on a high deductible policy. Plus I went over the allowed PT session limit my insurance set, so I had even more out of pocket expenses.

 

[Murph]

Always paid my medical expenses with my fidelity HSA card. Why go through the hassle of doing it your way?

 

[RunningBum]

Always paid my medical expenses with my fidelity HSA card. Why go through the hassle of doing it your way?

Who is the "you" and "your way" that you are referring to?

I pay out of pocket and save receipts because I can get tax free growth in the HSA. Not much of a hassle for me to record and save receipts, but if it is for you, don't do it.

 

[ZebraProcess]

For those of you with a Fidelity HSA (or any other national company), do they charge you for that account? We have an HSA account and when it drops below $5K, they're going to start charging us $25/month. Is it possible to move this HSA account to Fidelity? We started with $19K in it when my wife retired. I'm not sure how much is in it now, but probably $18K or more. We have time, but I'd rather get it out of the current company ASAP. Thanks.

 

[RunningBum]

No charge at Fidelity. I don't know about minimums. Check out their site and see for yourself.

 

[Svensk Anga]

Always paid my medical expenses with my fidelity HSA card. Why go through the hassle of doing it your way?

I put $33k into my HSA and it peaked at $63k. That’s $30k of capital gains and dividends that would have been taxed at at least 15% if I used the HSA funds and let the after-tax brokerage account grow. That’s $4500+ (I paid 3.8% NIIT some years) I saved in taxes. The tax savings number is still growing, though I’m starting to pull funds now. I do think it is worth jumping through some hoops for this magnitude of tax savings.

 

[Murph]

Who is the "you" and "your way" that you are referring to?

I pay out of pocket and save receipts because I can get tax free growth in the HSA. Not much of a hassle for me to record and save receipts, but if it is for you, don't do it.

My apologies for not being more clear. by "you", I was referring to the original poster. By "your way", I was referring to the way he/she was paying for his medical expenses. Its an extra, necessary step.

 

[sengsational]

I haven't reimbursed myself yet, but when I do I'll just shift the receipts from my HSA folder to my "tax year 20xx" folder.

Good idea. I've got a spreadsheet that has the total medical spending by year (and the so-far tiny amount removed from the HSA). That paper is tucked in the front of the HSA binder. But taking the used HSA receipts right out of the HSA binder and sticking them into the 20xx tax folder sounds like a way to indicate / make it easy / make it obvious for someone to keep things going if I'm not around to do it. Or if I don't remember

 

[sengsational]

Always paid my medical expenses with my fidelity HSA card. Why go through the hassle of doing it your way?

Legit question, IMO. It IS a hassle! But tax-free growth is probably worth it. There's no other way to take untaxed money, let it grow tax free, and spend it tax free. But the "let it grow tax free" is realllly juicy if you start young. If you do it the care-free way (just spend it), it's not like you're not getting the benefit of pre-tax health spending...of course you are, and that's a great benefit! It's the same kind of thing that happens if you w*rk and untaxed money is used to pay for medical...a nice benefit. But if you have money grow for two doubling periods (which isn't out of the realm of possibility), you could spend 4 times the amount of money on medical than if you ran it into and out of the HSA all in the same year. The 'strings attached' being medical only spending is something that almost certainly will happen, so not much risk there.

 

[FIREarly]

I did one year. I don't keep receipts but I always pay with a debit card directly from the HSA to the provider, so I just gave them the debit card transactions list available from my HSA account. I figured everyone did it that way but I guess not. Am I in the minority?

Search YouTube: OurRichJourney HSA

They have informative video on it. Retired federal workers.

 

[SecondCor521]

For those of you with a Fidelity HSA (or any other national company), do they charge you for that account? We have an HSA account and when it drops below $5K, they're going to start charging us $25/month. Is it possible to move this HSA account to Fidelity? We started with $19K in it when my wife retired. I'm not sure how much is in it now, but probably $18K or more. We have time, but I'd rather get it out of the current company ASAP. Thanks.

Mine is at Fidelity. Zero charges - none at all. I buy VTI and BND in there which are also commission free to buy and sell - other investments may charge a commission to buy or sell.

Yes, it is possible to roll an HSA over. I'd contact Fidelity and ask them to pull your old HSA over.

 

[FIREarly]

Originally Posted by ZebraProcess View Post
For those of you with a Fidelity HSA (or any other national company), do they charge you for that account? We have an HSA account and when it drops below $5K, they're going to start charging us $25/month. Is it possible to move this HSA account to Fidelity? We started with $19K in it when my wife retired. I'm not sure how much is in it now, but probably $18K or more. We have time, but I'd rather get it out of the current company ASAP. Thanks.

Mine is at Fidelity. Zero charges - none at all. I buy VTI and BND in there which are also commission free to buy and sell - other investments may charge a commission to buy or sell.

Yes, it is possible to roll an HSA over. I'd contact Fidelity and ask them to pull your old HSA over.

Lively HSA!!
Great B/D and let's you invest in stock market. Never has any fee and transferred $ in trustee-to-trustee from another HSA that charges $25 for transferring the money out.

 

[scaubie]

We’ve got HSA with DW’s employer linked to our checking account and we pay any unreimbursed medical/dental expenses with our 2% rebate credit card. When the monthly bill comes due we transfer from HSA to checking. All expenses are noted on the monthly statements. It seems to work fine for us. What is the advantage in waiting years to reimburse yourself?

 

[FIREarly]

We’ve got HSA with DW’s employer linked to our checking account and we pay any unreimbursed medical/dental expenses with our 2% rebate credit card. When the monthly bill comes due we transfer from HSA to checking. All expenses are noted on the monthly statements. It seems to work fine for us. What is the advantage in waiting years to reimburse yourself?

Investing your HSA money in the market makes X times more when you take it out years later!

Ex: Many people here say VTI or other index funds and back them. If you have more time, I love TSLA. It's made my non-retirement acct 300+% and, IMO, it has a long "runway." If you're closer to using the HSA, individual stocks are MUCH more risky and not advisable.

Either way, if you can afford to pay medical expenses with after-tax income you can have a MUCH larger HSA when you use it in retirement. Just make sure to use it because it does not have friendly laws when it's your time. Do not think HSA money transfers so, when the time is right, SPEND IT!

Edit: due to downturn in market non-retirement is down to 262%

 

[Montecfo]

Always paid my medical expenses with my fidelity HSA card. Why go through the hassle of doing it your way?

Basically to maximize tax free money to be used for medical costs. I really should check if but I'm sure I've made around six figures tax-free just investing my contributions and letting them ride.

I don't view it as a hassle because I expect to use it for future medical costs more than historical ones, though I have the receipts,.EOBs and other records.

 

[GreenER]

Always paid my medical expenses with my fidelity HSA card. Why go through the hassle of doing it your way?

OP here.
By paying out of pocket and keeping the HSA money invested for the last 5 years, it's grown enough that I'm now able to withdraw for those five years of expenses without dipping into the principal. In other words the market paid for all of our medical expenses for the last five years and the principal is still intact and then some! In addition it allows me to draw out a needed hunk of tax free money this year while avoiding effecting our AGI for our ACA insurance and without diminishing the even more flexible Roth account. In addition, I plan on using the accumulated HSA funds to pay for our medicare premiums when we get there.

 

[KarenF]

So what kind of documentation did they require? I could easily generate a report out of my accounting system with date, amount, payee, method of payment. The receipts are quite a heap, though. Lining those up would be more trouble to assemble. I might find that I'd need to pull a credit card statement for a missing receipt. Quite a PITA. Did you send a report, or copies of receipts or what? Also, do you think the letters might have been triggered by Schedule A activity?

I keep electronic copies of all my EOBs, and a spreadsheet for each year. I don't bother with OTC expenses though.

 

[FIREarly]

op here.
By paying out of pocket and keeping the hsa money invested for the last 5 years, it's grown enough that i'm now able to withdraw for those five years of expenses without dipping into the principal. In other words the market paid for all of our medical expenses for the last five years and the principal is still intact and then some! In addition it allows me to draw out a needed hunk of tax free money this year while avoiding effecting our agi for our aca insurance and without diminishing the even more flexible roth account. In addition, i plan on using the accumulated hsa funds to pay for our medicare premiums when we get there.

 

[jebmke]

I keep electronic copies of all my EOBs, and a spreadsheet for each year. I don't bother with OTC expenses though.

I did not keep or send EOBs in response to the IRS inquiry. They accepted my receipts.


Over the years I simplified my receipts considerably. I had our regular providers (doc, dentist) provide a statement in January for the prior year showing all charges, amounts owed by us and payments for the prior year. Total payments on the statement is all needed to arrive at filing number. Pharmacies will do the same (I generate it online with CVS).

 

[FIREarly]

HSA = +/- $8,000
IMO, that's worth paying after-tax money towards current doctor bills (within my budget).

 

[Time2]

We’ve got HSA with DW’s employer linked to our checking account and we pay any unreimbursed medical/dental expenses with our 2% rebate credit card. When the monthly bill comes due we transfer from HSA to checking. All expenses are noted on the monthly statements. It seems to work fine for us. What is the advantage in waiting years to reimburse yourself?

Here's one, now retired and wanting to maximize my Roth conversions, I'll get $20k of tax free income with $20k of HSA receipts I have saved. This allows $20k more in my Roth Conversion at a low tax rate.
Second, would be the tax free growth I have received starting in 2015.