You are missing the other side of it. Any unspent money in an FSA at the end of the year (and subject to the specific plan, a grace period on a small amount for a limited time), that money goes back to the funding of the FSA overall. In theory, it averages out. I say in theory because I haven’t seen studies that show actual dollars; just speaking to how it might make sense to answer your question.
Point of order: This thread is about HSAs and we are talking FSAs. There could be some confusion around that.
Thanks for the correction. Certainly not trying to provide any i correct information. I thought they worked the same. Thinking back on it, I only fund $200 per year in my Health FSA because we are fortunate to have very little expected annual healthcare costs. I usually don’t request disbursement claims until the end of the year. So they are usually a little over the $200 balance by then. Our Childcare FSA is funded with quite a bit more so I’m more expedient about filing that claim.
I paid $600 for a procedure that the Dr.'s office thought wasn’t covered, but it turned out to be covered so I’m getting a refund (Hooray!). But I paid for it with my HSA debit card. What do I have to do with that money? Do I just make a deposit into the HSA, or do I have to contact my HSA to tell them it’s really a refund and not a deposit?
You’ll need to fill out a form from your HSA provider that identifies the deposit as a return of a mistaken withdrawal. Here’s an example of such a form for a Fidelity HSA:
Your situation would not have happened to us. Our HDHP requires the medical provider to bill the plan first, and then send us a bill that we then pay later. They are not allowed to collect any money from us at the point of service. A workaround for you would be to use another payment method at the point of service, then reimburse yourself at a later date. We put everything on a cash back credit card. At the beginning of next year, I’ll add up all the HSA eligible expenses from this year and process an electronic transfer from the HSA to a checking account.
I like your method for handling medical expenses from HSA. Given the requirement of your HDHP, it sounds pretty optimal although I may not wait until the end of the year to transfer money from HSA in case of large medical expenses.
If we were using the money in our HSA, ideally I’d like to pay the whole bill directly via credit card rather than just the un-reimbursed portion. Just to collect more cashback. But then insurer would need to send us a payment rather than paying the provider then the provider asking you to pay the rest.
It actually works like this for our current dental/vision FSA where we pay everything upfront, then the insurer sends us a check, and finally we claim the un-reimbursed part with the FSA provider. Usually all that happens before the credit card bill is due so not a cashflow problem.
That is normally the case for us too and I’m not sure why this dentist office thought that this dentist was out-of-network when he was actually in-network. The only other explanation I can think of is that it could have been because we had the procedure done on my son when he was less than 2 weeks old and he wasn’t showing up on my insurance yet at that point.
Thanks for letting me know there should be a form. I couldn’t find it on my provider’s site so I had to do an online chat with them. They pointed out there was a box to check on the contribution form. I have to mail it in with a check. Easy enough.
Yes, as long as the IRS-qualified medical expenses were incurred after your HSA was established, you can pay them or reimburse yourself with HSA funds at any time. Just be sure to keep sufficient records to show that these expenses were not previously paid for by another source or taken as an itemized deduction in any prior tax year.
The only rule that applies is the medical expense must have been in a year you had a high deductible health plan with HSA.
So yes you can use your 2020 funding to pay for 2019 just make sure you have your receipts to demonstrate it was a medical expense.
Many people invest their HSA and pay they current medical expense with after tax dollars. Then when needed later in life they remove the HSA funding as a medical expense (from prior years). The only thing is they must be able to show it was a medical expense if they get audited.
The contribution has to be in a year you have an hdhp, but the medical expense doesn’t have to be incurred or paid in a year when you have an hdhp or have made any hsa contributions.
In case of switching job to employer without HSA option (no HD insurance plan offered), what happens to HSA contribution limits and using HSA money for expenses? Can we still max out to HSA contribution as long as we receive one paycheck from current employer with HSA option? Can we still use HSA money to pay for copay/prescription/hospital expenses based on new employer insurance plan which is without HSA plan?
You can only contribute when you presently have an HDHP. The owner of the HSA must match the primary subscriber of the HDHP. You cannot change the owner of an HSA or roll funds from one owner to another. So if you stop having an HDHP you can no longer contribute to the HSA. You can continue to use HSA funds for medical expenses until the HSA has no funds.
You could increase your HSA contribution amount at any point to max it out for the year (within the $3550/$7100 single/family limits) while you still are covered by a HDHP. Once you change jobs and no longer have access to HDHP, you can no longer contribute more to the HSA.
But you’re free to use any/all the money already in the HSA for current year or future year expenses regardless of coverage.
This won’t work. HSA contribution limits are pro-rated by the number of months in the year you qualify*. You would have to either withdraw the excess contributions by tax day or pay an annual penalty on them. Voya Financial: Plan, Invest, Protect | Voya.com
*There’s also a last-month rule, which allows you to make the full annual contribution if you qualify on December 1st subject to some restrictions, but that doesn’t apply to ritzhotz’s case.
Yes, it should be. Most HSA administrators (probably all) allow you to make an electronic deposit, but they should all have a form you can send in with a check for a post tax contribution that you would later deduct on your taxes too.
Recommend getting your own non-company affiliated HSA account. Fidelity’s is working out pretty well for me … more investment options and no direct fees.
Does your employer allow you to make additional contributions via paycheck deductions? They’re not taxed for Social Security and Medicare that way. Contributions you make outside of paycheck deductions don’t get those particular tax breaks.