Yes!
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Thatâs what we would do, if we actually used the money in our HSAs.
Why give up 2+% cashback/rewards? If your annual spend from HSA is $5k, youâd be leaving at least $100 on the table.
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That is probably an option. You may also wish to have them send you a check. Our current HSA also provides a checkbook which we use for our reimbursements.
Yes!!!
We are planning to spend 4k on kid braces. Is it better to spend our own money and claim from HSA account later. How many days do we have to claim past expenses?
Thanks
Yes, so that you can earn CC rewards. There is no time limit to reimburse yourself. As mentioned above, some people hold off for many years with the intent of reimbursing themselves in retirement tax-free. Just save your receipts in case you get audited.
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What he said ^
To be clear, the assumption is that you are not strapped for cash and have money in taxable savings and investments. By paying for the braces now with money from your taxable stash, you are increasing the amount of non-taxable earnings that will continue to accrue. That is, your HSA acts like a Roth sort of.
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Iâd also look into FSA. Since braces are dental, you actually CAN have both a HSA and a limited FSA (dental/vision). Weâve actually done this twice now for our first two kids. That allows us to keep maxing out HSA (and not use it for now) and cover that large expense with FSA. That allows you to avoid tax on both the HSA amount and on the dental FSA.
We setup initial visit and estimate with orthodontist towards the end of the year, and arranged for dental FSA for the beginning of the next year.
Of course, paying with credit card was our plan except our orthodontist gave us 5% discount for paying cashâŚ
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Thanks Shandril. We did not put any money in FSA for this year. We need to get it fixed soon. We can try staggering payments and pay some amount with next year FSA. For some reason this treatment is very expensive. We are stuck with not deciding on anything.
Thanks
You can also talk to the orthodontist to work out if theyâd take full payment only starting Jan 2nd of next year. The nice thing about health FSA is that they will pay you the full annual amount even if you have not contributed it all for the year (unlike dependent care FSAs). you can also discuss whether a 6 month delay in starting things would affect the treatment and expected outcome. Alternatively, you can discuss paying only for the work that will be done this year, and paying the rest early next year.
Most orthodontists are very aware of how to handle these FSA situations. They know itâs a big expense and they are not the only gig in town. And if youâre like us with very strong potential for repeat business (3 kids all needing braces), theyâll definitely work a bit harder to accommodate your payment timing. For us, they also threw in a 5% extra discount for the second kid and another 5% off for our last one in a couple of years.
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We were able to get some kind of payment plan from Orthodontist. We paid 30% now. They agreed to wait for rest of the payment in JAN 2020. I am hoping that, there is a way to put rest of the payment as FSA and pay it from it. This should save us at least $600 in taxes.
Bringing this almost full circle, just remember to pay all of it with your points card and then reimburse yourself from your HSA/FSA. This has two benefits:
- The obvious % rewards.
- You can reimburse yourself late next year, after your FSA has been fully funded.
Actually I think you can reimburse yourself fully right away. Our Health FSA (even if limited to dental and vision) will allow reimbursements for the full amount even if they have not been fully funded through your paycheck contributions. So for this time around for example, we did the initial visit (free) with quote for the work to be performed for our kid in October 2018 (right before open enrollment).Then we scheduled the first appointment when theyâd start work on his braces on Jan 3rd. We paid the full amount via credit card and filed our FSA claim the next day (actually 2 FSA claims since it was over $2500). The FSA paid us the full amount with the next paycheck even though we had barely contributed anything to it. Weâve done this twice now and have gotten reimbursed before the credit card payment is due. I think itâs the norm for medical FSA.
But even if someone your FSA was not reimbursing it all right away, you may as well file the claim(s) for the whole amount as early as you incur the expense. Then, each paycheck, theyâll basically reimburse you the exact amount of your contribution for that paycheck. Btw, that way is how our dependent care FSA seems to operate. I never understood why. Even though the FSA provider is the same for both.
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Thanks for the info. Iâve been dealing exclusively with HSAs since 2012 and was unaware that FSAs behaved differently. Come to think of it, Iâm not sure what would happen if I tried to get reimbursed from an empty HSA account. I just presumed that I would hear laughter or crickets from the HSA bank ⌠or more likely a fee for trying to take money from an empty account.
Their website would surely not allow transferring more than the balance on the account. If you used a Debit card linked to the account, I assume it would get declined but if not, then yeah they could charge you some insufficient funds fee or something. Probably not worth trying too hard to do this âŚ
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My employer Healthcare FSA lets you file the claim as you incur the expense and if you do not have enough contribution funds yet in your account they will pay what is there and send monthly direct deposits (or checks) as you contribute throughout later months to cover the rest of the claim as your account is funded.
I also have a childcare FSA and I use that to pay for summer camp for my child. I paid early for camp registration and filed an early claim but they denied it as I had not yet started (or finished) the summer camp. I resubmitted after the camp was completed and they had no problem paying out then and did monthly payments for the remainder of my monthly FSA contributions as described above.
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@Corndogg The Health FSA is legally required to be fully funded on Jan 1st of the year. You can use all the money at any time without waiting for payroll contributions. The dependent FSA works like you describe - the claims are filed AFTER an activity is completed and paid out as contributions are made from ongoing payroll.
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That doesnt sound legal. One big âadvantageâ of FSAs is that you can fund it for $2600 ($100 every 2 weeks), get reimbursed for a claim on January 2 for $2600, and then quit your job January 3 having contributed only $100 to the account. The sponsor is required to eat the difference.
If they do not pay out the full claim when itâs submitted, itâs worth a formal complaint.
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As the previous posts have said, a health care FSA doesnât work that way.
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I never understood how this part is legal to be honest.
Why would healthcare FSA not work like a dependent care FSA where you are reimbursed only up to the amount you contributed? And how is it that your employer cannot deduct âmissingâ contributions from your severance pay or last paycheck is even more puzzling.
The whole thing ends up being an administrative cost basically that is preventing some small business from offering healthcare FSAs.