Author Topic: Using HSA to pay yourself for previous medical bills (particularly Fidelity)  (Read 595 times)

Padonak

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I have a question about using your HSA to get reimbursed for medical and dental bills that you paid out of pocked in previous years, particularly Fidelity HSA which I currently have, but also in general.

I opened an HSA with Fidelity last year and transferred money from another provider because Fidelity was cheaper. I usually pay my medical bills out of pocket and keep the medical bills so that I can get reimbursed later (could be 10 or 20 years from now) by sending them to my HSA provider and getting paid from the HSA account tax-free. The HSA will hopefully grow at a higher rate than inflation.

I just tried to test that process with Fidelity and couldn't find that option on their website. I also found the following statement which concerns me: "As long as you opened your HSA before the expense was incurred, your reimbursement will be tax-free"

-Is it possible to get reimbursed tax free if you paid your bills before you opened an HSA account? Is there any kind of legal restriction that prevents you from doing so?

-What documents are required to get reimbursed? Would a scan of medical or dental bill be enough?
« Last Edit: September 26, 2020, 03:01:31 PM by Padonak »

Paul der Krake

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Yes, it is a legal restriction, because thatís what Congress decided. This is why opening an HSA early in life is a good idea, even if you later switch to a traditional plan.

It is up to you to maintain adequate records, not your custodian. They may nudge you into uploading and store a receipt for your own convenience, but itís not their job to police your distributions.

Yes, the general consensus is that a digitized copy of a bill is adequate proof of an expense.

Runrooster

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I donít have Fidelity but I looked at my HSA account and itís straightforward to request a distribution and optionally upload a receipt. Yes, expenses must be incurred after you put the money in, but they generally donít police you. So if you had money from a different HSA that you rolled into this one, that counts too.

MDM

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I opened an HSA with Fidelity last year and transferred money from another provider
If that transfer was from another HSA, the start date of that HSA determines the tax treatment of HSA withdrawals used for medical purposes.

Padonak

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I opened an HSA with Fidelity last year and transferred money from another provider
If that transfer was from another HSA, the start date of that HSA determines the tax treatment of HSA withdrawals used for medical purposes.

So does it mean that I can get reimbursed for all medical expenses starting from the date when I got that first HSA which was then transferred to Fidelity?

MDM

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I opened an HSA with Fidelity last year and transferred money from another provider
If that transfer was from another HSA, the start date of that HSA determines the tax treatment of HSA withdrawals used for medical purposes.

So does it mean that I can get reimbursed for all medical expenses starting from the date when I got that first HSA which was then transferred to Fidelity?
Yes, as long as there was no intervening 18 month period in which the HSA balance was $0.

See HSA Establishment Date and links therein for details.

Padonak

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I opened an HSA with Fidelity last year and transferred money from another provider
If that transfer was from another HSA, the start date of that HSA determines the tax treatment of HSA withdrawals used for medical purposes.

So does it mean that I can get reimbursed for all medical expenses starting from the date when I got that first HSA which was then transferred to Fidelity?
Yes, as long as there was no intervening 18 month period in which the HSA balance was $0.

See HSA Establishment Date and links therein for details.

No, there wasn't. Thanks!

terran

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You don't need to submit receipts, just request the distribution. You'll let the IRS know the distribution was for qualified medical expenses when you file form 8889, and you'll only need the receipts if you're audited.