Wildly OT: HSA reimbursement question

[smontanaro]

Long shot (and I suspect I can guess the answer), but if you opened a Health Savings Account on, say, Jan 1 2015, can you legitimately reimburse yourself for medical expenses which occurred before that date?

[tiretrax]

It's for the current year, with a small carryover to the next.

[likebikes]

the best way to use a hsa is to never file any reimbursements from it and use it as another retirement savings acct.

[smontanaro]

Thanks @tiretrax. I'm still a bit confused. Let's assume I have $5000 in my HSA at the end of calendar year 2014, and that my contributions run at a rate of $100 per month. At the end of March 2015, I will have $5300 in my HSA. In April, if I incur a medical expense of $1000, are you suggesting I can only get reimbursed up to the $300 I've contributed so far that year?

Surely money in the account should be usable to reimburse for later year expenses. I know I originally asked about covering expenses accrued prior to starting to fund my HSA. I accept that isn't going to be possible. (I didn't think it would be.) Your answer sort of suggested that I can't use accrued contributions from earlier years to reimburse for later expenses either.

[paredown]

Thanks @tiretrax. I'm still a bit confused. Let's assume I have $5000 in my HSA at the end of calendar year 2014, and that my contributions run at a rate of $100 per month. At the end of March 2015, I will have $5300 in my HSA. In April, if I incur a medical expense of $1000, are you suggesting I can only get reimbursed up to the $300 I've contributed so far that year?

Surely money in the account should be usable to reimburse for later year expenses. I know I originally asked about covering expenses accrued prior to starting to fund my HSA. I accept that isn't going to be possible. (I didn't think it would be.) Your answer sort of suggested that I can't use accrued contributions from earlier years to reimburse for later expenses either.
AFAIK, your example would be OK. We had an HSA for a while, and the balance was cumulative and used when we needed it. We would still keep ours active, but they are not compatible with ACA health plans, because of the wording of the ACA.

[Idris Icabod]

the best way to use a hsa is to never file any reimbursements from it and use it as another retirement savings acct.

I'm not sure I understand this. Isn't HSA only good for 1 year with a short grace period and then it is surrendered? How can you keep rolling contributions until retirement?

Thanks @tiretrax. I'm still a bit confused. Let's assume I have $5000 in my HSA at the end of calendar year 2014, and that my contributions run at a rate of $100 per month. At the end of March 2015, I will have $5300 in my HSA. In April, if I incur a medical expense of $1000, are you suggesting I can only get reimbursed up to the $300 I've contributed so far that year?

Surely money in the account should be usable to reimburse for later year expenses. I know I originally asked about covering expenses accrued prior to starting to fund my HSA. I accept that isn't going to be possible. (I didn't think it would be.) Your answer sort of suggested that I can't use accrued contributions from earlier years to reimburse for later expenses either.

From day 1 you can spend the entire projected allowance for the year. So on Jan 1st despite contributing nothing until paycheck #1 you could spend $5,000 (assuming that is what you elected for the calendar year). If you leave the company you don't need to pay back anything you haven't contributed yet.

Dependent care however can only be spent as it is accrued.

[tuxbailey]

I'm not sure I understand this. Isn't HSA only good for 1 year with a short grace period and then it is surrendered? How can you keep rolling contributions until retirement?



I think he was talking about the account based health spending account vs. the traditional FSA accounts.

The account based one, you can carry the left over money year to year and when you reach certain balance you can even invest with it (within the account.) Like your 529 plan for school.

[smontanaro]

I'm not sure I understand this. Isn't HSA only good for 1 year with a short grace period and then it is surrendered?

I believe you are thinking about FSA (Flexible Spending Account). That one is anything but "flexible." If you wanted to (for example) pay for Lasik surgery with it, you'd have to account for that possibility at the start of the year. If, later in the year, you decided Lasik wasn't for you, you'd have all this money in your FSA which would "expire" at the end of the year.

On the flip side, if you had an unexpected medical problem during the year, the chances are your FSA wouldn't have enough money in it to cover it.

[jlyon]

You might be able to ask the Doctor to rebill you.

Then if that new bill had a new date on it I would roll with it.

[pncguy]

I'm no CPA or tax expert, but here's my understanding.

If you have a Health Savings Account, you (or your employer) put money into it - up to a limit - to cover medical expenses. You get a tax deduction, and any qualified expenses you pay for with it let you take it out tax free. If you don't spend the money, it just sits there until you do spend it. Often, if your balance gets big enough, your provider may allow you to put it into an investment account.

If you have a Health Care Reimbursement Account, your employer puts money into it that is taken regularly from your paycheck. You can use up to the full amount expected to be deposited by the end of the year on qualified expenses. But if you don't use it by the end of the year (or maybe the end of a grace period in January) you lose it. On the plus side, you could pay for that Lasik surgery early in the year even though you haven't actually had the full amount deducted from your paycheck. Another odd thing is that if you DO pay for the Lasik, but then you get laid off, you actually don't have to reimburse the company!

Generally an HSA goes with a high deductible health plan whereas a HCRA doesn't.