What does it mean to "reimburse" myself with my HSA?
3 min read •
30 sec brief
One of the benefits of having a Health Savings Account is that you can reimburse yourself for qualified medical purchases at any time.
Editor’s note: Because learning about HSA reimbursement rules is vital, we’ve written a newer blog post: “HSA Reimbursement Rules: How to Get Reimbursed, and When.” This new blog will also help you determine when to reimburse yourself for qualifying health expenses in order to build wealth and security in retirement.
If you have a Health Savings Account (HSA) and faithfully contribute to it, you’ll be able to login to your account and see your balance grow. But what happens if you have an expensive medical cost that your HSA funds can’t completely cover?
The good news is you can still use your HSA funds to pay for this expense - just later than you anticipated. As long as you opened your HSA before the medical event happened, you can reimburse yourself any time, as long as the expense isn’t repaid by a third-party or by any other means.
Reimbursing yourself through an HSA
One of the benefits of an HSA is that you’ll be able to repay yourself for the money that you used out-of-pocket - even if you used all of your funds in your account. You have the ability to reimburse yourself at any time, which means you’ll be able to accrue more tax-free funds in your HSA and use the HSA to refund yourself of a qualified expense.
HSAs are taxed advantaged savings accounts. You don’t pay taxes on the money you contribute. You can use the funds to pay for qualified medical expenses. And, the money in the account rolls over year to year. Another perk? You can use an HSA as a retirement account. After you turn 65, you can withdraw money from your HSA and only pay income taxes.
There are several excellent reasons to have an HSA and contribute to it. From the tax advantages to using it for additional retirement savings, HSAs are a great tool to add to your overall financial plan.
With all the advantages of HSAs, there will come a time you need to use your HSA to reimburse a qualified medical expense.
How does reimbursing yourself through an HSA work?
Say, while walking into work, your mind is on an important meeting you’re running late for, you trip on the sidewalk, take a spill, land yourself in the ER and end up with a $3,500 bill.
You think of your HSA and realize you don’t have $3,500 in it.
To pay for this medical event, you can use the money you have in your HSA, and pay the rest of the bill out-of-pocket, with money you’ve already paid taxes on. When you do this, always keep the receipts of the transactions, in the event that you ever get audited by the IRS.
As time goes on, you can build your HSA back up by continuing your contributions. Once your account reaches $3,500, you can reimburse yourself with tax-free HSA funds for the money that you used to pay out of pocket. This is where keeping the receipts is important because you can easily attach that to your reimbursement.
Reimbursing yourself with your Lively account is easy, it’s all done through our easy-to-navigate dashboard!
How to reimburse yourself through your Lively account
- Access your Lively account online through our online portal, iOS or Android App
- Navigate to “Transactions” in the menu or click on “Add New Expense”
- Add a receipt or expense by entering the pertinent details such as date, merchant, cost, and image
- Choose to reimburse yourself now or later
We suggest taking a picture of all of the receipts you have for your healthcare expenses so you can keep them attached to your transactions within your Lively account.
Consider creating a folder on your device to keep all healthcare-related receipts and other relevant documents so they’re available with a couple of clicks. Having your information ready to go makes using your HSA simple!
An HSA is a great way to help save for healthcare expenses now and in the future.
Lively’s quick and easy reimbursement process makes it easy to use your funds when you need them.
Ready to get started?
See Why Lively is the #1 Rated HSA Provider