Author Topic: HSA to pay expenses I will be reimbursed?  (Read 1191 times)

GetItRight

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HSA to pay expenses I will be reimbursed?
« on: September 13, 2015, 06:01:25 PM »
Was hit by a car recently. Last year I changed to a HDHP with HSA. I am still in debt repayment stage so while I recognize it can be used for ER purposes I have been pulling from it to reimburse myself for medical expenses charged to a cash back CC. So far just a small amount of dental work. The other driver has admitted fault and been found at fault by police and insurance. I expect to be compensated for my medical expenses as well as lost work, and an undetermined amount for pain, suffering, inconvenience, etc. as I am still being diagnosed and treated and unsure the time to recovery and whether recovery will be full or if there will be ongoing or future issues.

Can I use HSA money to reimburse myself for medical expenses related to being struck by a car, which I will later be reimbursed for by the at fault drivers insurance? I see opportunity to make 2% cash back on CC, then reimburse myself for part (HSA is small) with tax free money which will allow me to maximize debt payments (minimizing interest) until reimbursed from insurance. Unfortunately I can only increase HSA contributions once per year as per HR, I tried calling and asking if I could max it for the rest of the year as I expect this will cost me about $5k out of pocket. Just want to be sure there's no legal issues using the HSA if I will be otherwise reimbursed.

ClovisKid

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Re: HSA to pay expenses I will be reimbursed?
« Reply #1 on: September 13, 2015, 07:57:46 PM »
Yes, you can absolutely use money in your HSA to pay medical expenses regardless if you expect the expenses to be reimbursed.  In your case, there is certainly no guarantee that you will get reimbursed in full or in part and you will have to pay these expenses regardless.  However, it does seem likely that you'll eventually be reimbursed.

If there is a very high likelihood that you will be reimbursed, I would recommend that you pay all of those expenses out of pocket, even if it's on credit, rather than withdraw the money from your HSA.  HSAs are the best tax-advantaged account out there.  If you pull money out, then you forever lose the tax deferred gains on that money.  Forever.  It's hard math to beat.