Can You Use Hsa For Contacts

When yous have a medical expense there are two means of paying. You lot tin can either 1) swipe your Lively Visa debit bill of fare at the time of buy, or ii) reimburse yourself subsequently.

What does it mean to "reimburse" yourself with your Wellness Savings Account (HSA)? It means paying out-of-pocket for an HSA-qualified medical expense and so using coin from your HSA to pay yourself back. This can be done even if y'all don't have coin in the account the day the expense incurred, and at whatsoever fourth dimension in the future. Whether you reimburse yourself now⁠—or later⁠—has some interesting benefits.

Paid for a medical expense out-of-pocket? What's next?

Every bit long as the qualifying medical expense was made after the establishment of your HSA, y'all tin can use your HSA to pay yourself back for your out-of-pocket expense. And while it isn't required that you submit receipts to exist reimbursed from your HSA, we recommend it in instance of an IRS audit.

Know what qualifies every bit an HSA-eligible medical expense

There are thousands of HSA qualified medical expenses. Expenses are likely pretty obvious if you lot're at the md'south, having an heart exam, or at a dentist appointment. But what about over-the-counter products like sunscreen, prenatal vitamins, or contact lens cleaning solution?

Use "What'due south Eligible" to observe qualifying medical expenses without the requirement of a medico's note, with a prescription, or with a doctor's letter. Better however; allow Lively'due south Expense Lookout man do the searching for yous.

Expense Spotter

Don't spend your time scanning receipts trying to find your HSA-eligible medical expenses.

Instead, use Lively's Expense Sentinel to scan and alarm yous of potential HSA-eligible expenses from linked external accounts. Like your personal debit carte or credit cards. Expense Picket prompts you lot to a list of expenses for review. So you lot accept the option to pass up or submit them⁠—with receipt—for reimbursement, now or later on.

Document all medical expenses

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To justify spending coin on a qualified medical expense, you should keep or track your expense receipts. Receipts should exist kept for every bit long as your tax return is open and field of study to an audit; ordinarily three years. Or as long as your HSA is open. Whichever is longer.

Some HSA companies (like Lively) offer digital receipt filing then you can certificate your receipts without having to save piles of receipts. This is helpful if you plan on paying for out-of-pocket expenses and reimbursing yourself "twenty years" from at present. Only, more on that hack in a bit.

Records to keep in instance of an IRS audit

Information technology's best to relieve a copy of your health insurance carrier's Explanation of Benefits (EOB) in example the IRS audits you lot. This documents the expenses for services covered under your High-Deductible Health Programme (HDHP). You should also go along receipts for all products or services you paid for.

In case of an IRS inspect, yous need to take records that show:

Distributions were to pay or reimburse qualified medical expenses,
Qualified medical expenses had not been paid or reimbursed from another source, and
The medical expenses had not been taken as an itemized deduction in whatsoever twelvemonth.

When you cull to be reimbursed for an eligible medical expense that'southward called a distribution.

If you take a distribution your HSA provider volition ship you Form 1099-SA. You should be prepared to file Course 8889 with your almanac taxes. If there'south something that doesn't lucifer between forms 1099-SA and 8889, resolve information technology before filing your taxes. Keep reading to acquire how HSA distributions are taxed and reported.

When can I reimburse myself for an out-of-pocket expense?

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You lot can reimburse yourself anytime.

Today, tomorrow, or xx years from at present. The simply rule is that your HSA was established at the time that the expense was incurred (appointment of service). And that the expense was not reimbursed in any other style.

This is one of the reasons why knowing the exact date of the institution of your HSA is important. You cannot be reimbursed for expenses that were incurred prior to that appointment.

Did you know that y'all can also reimburse yourself for expenses even if you are no longer eligible to contribute to an HSA? That's because the employ of your funds is non tied to HSA eligibility. Once you add together money to your HSA, it's yours. And it tin can exist used at any time in the futurity.

Want more coin in retirement? Reimburse yourself afterward

1 of the major financial benefits of an HSA is that you lot can choose to reimburse yourself anytime. This gives you the opportunity to save the funds in your business relationship. Information technology also provides the opportunity to increase interest earned or provide more than time for invested funds to grow.

Many people choose to pay for medical expenses out-of-pocket and reimburse themselves after. Since there'south no reimbursement deadline, you can choose to reimburse yourself years after. Even during retirement.

This requires y'all to save your receipts and invoices for reimbursement. In the event that you ever get audited by the IRS, they volition ask for proof. If you're unable to provide those records, you lot would have to pay regular income tax plus a twenty% penalty on your reimbursements.

How HSA distributions are taxed and reported

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If you use your HSA to buy a qualified medical expense, yous will not have to pay income taxes on those funds. If you use your HSA for something other than a qualified medical expense, that distribution is taxable income. And you can be bailiwick to a 20 percent penalisation for early withdrawal. When an HSA account holder reaches the historic period of 65 or becomes disabled, they are no longer subjected to that twenty percent penalty.

In terms of reporting HSA taxation information, the HSA trustee or custodian keeps all reports of distributions. The trustee then shares that information to the account owner through IRS Form 1099-SA. HSA account holders are responsible for reporting their own distributions to the IRS through Taxation Form 8889. Information technology'due south recommended that HSA owners proceed records of all their distributions, in the upshot, they always become audited past the IRS.

HSA reimbursement in action

Real-life example: When your HSA is depression in funds

James recently got a new chore and has a diversity of health plans to cull from. He decides on a high-deductible health plan so that he tin accept advantage of his employer's HSA contributions. Upon opening his account, he deposits a dollar to establish his account.

A few weeks after opening his business relationship, James gets into an blow and sprains his ankle. Since he doesn't have those funds in his HSA even so, he pays for his handling out-of-pocket. He saves his receipts with a digital receipt organizer, so he tin reimburse himself later.

Fast forward to a year from then. James now has enough money in his HSA to pay himself dorsum for those out-of-pocket expenses. Because he kept such diligent records, he was able to reimburse himself with his HSA.

He reports this information to the IRS using IRS Tax Class 8889. If James did not written report his distribution to the IRS correctly, the coin he withdrew could receive a 20% taxation penalty. Since James saved his receipts, he won't take to pay this penalty. And he receives the revenue enhancement-free benefits from using his HSA for qualified medical expenses.

Real-life example: Your savings strategy

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Juliet is a smart, money-savvy individual and she wants to get the almost out of her HSA when she retires. She enrolls in an HDHP for several years and also maxes out her HSA every twelvemonth. When she needs to pay for a wellness-related expense, she pays out-of-pocket. She tracks her health expenses by taking pictures of her receipts and logging them into Lively App to reimburse herself after.

Fast-forrard to years from now when Juliet is in retirement. Since she hasn't withdrawn any of the coin in her HSA, she was able to earn more interest with her college account residuum. And fifty-fifty earned more through investing some of her funds.

Juliet has diligently logged years' worth of spectacles, contacts, prescriptions, and other qualified health-related expenses into her account. Which, when added together totals thousands of dollars. She chooses this opportunity to finally reimburse herself for those expenses with her HSA. And uses those funds to help her travel during retirement.

Reimbursing yourself for out-of-pocket medical expenses with Lively

Accept a couple of out-of-pocket expenses that you can use your HSA for? Here's how you tin reimburse yourself through the Lively app:

Admission your Lively account through our online portal, iOS, or Android App.
Navigate to "Transactions" in the bill of fare or click on "+ Expense."
Cull "Add Expense: For purchases made using your personal fund."
Enter the amount of the medical expense, who the merchant/provider was, and the appointment you lot made the purchase or started receiving service.
Choose "Get Reimbursed Later" or "Procedure Immediately."
Add together a receipt by taking a photo or uploading an image.
Click the "Submit" push button.

This process is quick and like shooting fish in a barrel, and you lot'll have those funds in your account inside 2-iii business days.

Nosotros suggest taking a pic of all of the receipts y'all have for your healthcare expenses and then you can keep them attached to your transactions within your Lively business relationship. Having your information ready to become makes using your HSA unproblematic.