HSA users, a question if you will

[NoMoreDebt]

Utilizing my work sponsored HSA nearly to the max contribution amount this year and im curious if its feasible to pay for HSA legible items first (Meds, Dr/Hospital bills etc) with my credit card instead of the supplied debit card for the cash back and then reimburse myself from the HSA account to pay the credit card bill?  The idea obviously being to rack up more cash back, or is that a recipe for drawing the ire of a IRS audit? 

Last year we only used the debit card but I did not contribute much to it all. This year I am we can potentially use the majority of whats going into that account

[Bill77]

Yes, sure you can do that.  Just remember to keep credit card statements for those periods.  

[K-in-Boston]

Definitely!  In case of an audit, to be safe I would just scan any receipts you reimburse yourself for and save those.

[Royalbacon]

Yes you absolutely can, in fact that's the best way to do it!

I know a lot of HSA's (Mine defintitely does) allows you to upload a copy of your receipt when you reimburse yourself, that way if you ever were to get audited, you have all your reciepts on file on your HSA's online banking! Works a lot better then trying to keep track of numerous random paper receipts for several years.

[NoMoreDebt]

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@Royalbacon wrote:

Yes you absolutely can, in fact that's the best way to do it!

I know a lot of HSA's (Mine defintitely does) allows you to upload a copy of your receipt when you reimburse yourself, that way if you ever were to get audited, you have all your reciepts on file on your HSA's online banking! Works a lot better then trying to keep track of numerous random paper receipts for several years.

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I just tried it out and ours does also (Optum Bank)  have a way to scan and add a payment receipt into the expense journal. pretty slick for sure and definitely the way ill handle expenses with this account going forward.

[Royalbacon]

Optum is who I've got my HSA with since the middle of 2019 through my employer! I've had zero issues with them during those 4+ years!

[Citylights18]

I've been maxing out my HSA for years. I have never tried the reciept route on credit card. While its legal to do I don't think its worth the hassle and from my recollection there isn't any speciality categories for paying medical bills where you'll get 5x or 10x points. The best you could do is maybe pay with a Citi Double Cash. One thing I have done is used it for buying glasses and picked up online shopping points but paid with my HSA debit card.

HSA money in my plan is also investable in money market plans. Never felt it was worth the risk to explore as you can get one of those years like 2022 where the market's peak was January 2nd and it was all downhill from there.

Also when you leave your employer you can draw into the HSA for COBRA payments if you need coverage while unemployed. I don't know what the COBRA payments are now but if they are $400 you might be able pay for a few months of coverage directly out of it rather than your own pocket. Which is also a justification for maxxing the HSA out and build up 5,000 or 10,000 in there as a buffer in case you need it. That of course would unwind quickly in a 6 or 12 month layoff. Plus its less risky than a 401k contribution where you can get burned if you contribute high and the market tanks.

[iced]

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@NoMoreDebt wrote:

Utilizing my work sponsored HSA nearly to the max contribution amount this year and im curious if its feasible to pay for HSA legible items first (Meds, Dr/Hospital bills etc) with my credit card instead of the supplied debit card for the cash back and then reimburse myself from the HSA account to pay the credit card bill?  The idea obviously being to rack up more cash back, or is that a recipe for drawing the ire of a IRS audit? 

Last year we only used the debit card but I did not contribute much to it all. This year I am we can potentially use the majority of whats going into that account

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Not only can you do this as others have posted, you can do it retroactively if you keep the receipts. A HSA is most powerful when you max the contributions and do not withdraw from it for years (decades). Invest the balance and let it balloon while you continue to max out contributions, then tap into it in retirement to pay for all medical expenses. If you saved those receipts, you can then retroactively reimburse yourself for something you paid for decades ago and still avoid income tax should you wind up with more in your HSA than you'll ever need for medical expenses in retirement (you can withdraw for any reason after a certain age, but non-medical withdrawals incur income tax).

FSA is another animal altogether. You must use that money every year or lose it.

[Horseshoez]

Sorry to dredge up an old thread, but I was about to ask this very question.

I'm in my later 60s and have been contributing the IRS maximum for both my 401(k) and HSA for years; unfortunately due to being very active, and the associated broken bones, stitches, physical therapy..., my HSA was barely treading water at the start of this year, and I mean, like less than $500 in it.  Recently I've finally started seeing medical expenses more associated with folks my age, and am looking at a year of LOTS of expenses, starting with some surgery back in January where my portion was over $4,300.  Knowing my HSA didn't have anywhere near that kind of money in it I did the following:

• Paid my portion with my CFU
• Dialed up my HSA witholdings to a tad over $3,900 for two consecutive pay periods which maxed my contributions out for 2024
• Paid myself for the money I put on my CFU

This situation led me to think, "Why the hell haven't I been doing this all along; that is a heck of a lot of cash back rewards I've been missing out on."

Next question not covered above...

I'm being recruited by a major tech company to take a new job some time this year; given I've been in a high deductible plan and maxed out my HSA for this year, if I do in fact change jobs, would be anything prohibiting me from opting for a low deductible plan for the remainder of 2024, and then switching back to a high deductible plan for 2025?

[iced]

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@Horseshoez wrote:

Sorry to dredge up an old thread, but I was about to ask this very question.

I'm in my later 60s and have been contributing the IRS maximum for both my 401(k) and HSA for years; unfortunately due to being very active, and the associated broken bones, stitches, physical therapy..., my HSA was barely treading water at the start of this year, and I mean, like less than $500 in it.  Recently I've finally started seeing medical expenses more associated with folks my age, and am looking at a year of LOTS of expenses, starting with some surgery back in January where my portion was over $4,300.  Knowing my HSA didn't have anywhere near that kind of money in it I did the following:

• Paid my portion with my CFU
• Dialed up my HSA witholdings to a tad over $3,900 for two consecutive pay periods which maxed my contributions out for 2024
• Paid myself for the money I put on my CFU

This situation led me to think, "Why the hell haven't I been doing this all along; that is a heck of a lot of cash back rewards I've been missing out on."

Next question not covered above...

I'm being recruited by a major tech company to take a new job some time this year; given I've been in a high deductible plan and maxed out my HSA for this year, if I do in fact change jobs, would be anything prohibiting me from opting for a low deductible plan for the remainder of 2024, and then switching back to a high deductible plan for 2025?

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I'd get a final answer from HR (should you take the job), but I believe qualifications are based on contributions only, so as long as you aren't making contributions to it, you can be on whatever health plan you want. Once it's in your HSA it goes with you, regardless of health care later (which also makes a lot of sense since a big use of HSA is during the Medicare years, and Medicare itself isn't a qualifying plan to make HSA contributions).