I'm 33 and have had a HSA since I was 29. My intention was to only claim a medical expense from my HSA until I've turned 65 or if I don't have enough funds outside of my HSA to pay for medical expenses. The latter hasn't happened, and I don't think it'll happen.
But waiting another 3 decades to redeem seems a bit extreme w.r.t keeping track of all these receipts! Anyone in a similar position? Are you really intending to wait until 65 to claim?
Waiting to redeem from HSA until 65?
byu/Diligent_Board_172 inpersonalfinance
Posted by Diligent_Board_172
16 Comments
At 65 it turns into an IRA. Just pay taxes, but you can pull for any reason at that point. If you still have the receipts, great. Reimburse yourself tax free. If not you aren’t much worse off.
You can continue to use your HSA for health related expenses in retirement. You can also use it for premiums for Medicare and gap insurance. Additionally, you can use it as a traditional IRA in retirement, although you will pay ordinary income taxes on the distributions.
I assume my medical expenses will be high in retirement. Medicare & Gap insurance also don’t cover everything. For example my mom had to pay for her cataract surgery out of pocket.
But yeah I am waiting until I’m 65.
You’ll have plenty of medical expenses from age 65 and on. So you don’t really need to save much paperwork.
Perhaps save only the big ones.
Why does it seem extreme to tracking the receipts? I just consider it part of my emergency fund. If I need to tap it at any point, I can. Otherwise, it is retirement savings.
I save my receipts and consider my HSA as an emergency fund; I can reimburse myself for past medical expenses if need arises. Also, I’m planning to retire early, and will use my hsa to cover medical expenses until Medicare kicks in at age 65.
I’m not waiting until age 65 to claim, but I’m not planning to use it except for medical expense reimbursements until then, and I’m deferring those until I need them.
My HSA has a way to store digital receipts supposedly indefinitely so I just log them to withdraw if needed.
I’m saving my HSA to cover the 3 year gap when I retire at 62, and then I’ll use the rest for health expenses after. Unless I absolutley need to, I will not be touching it until then.
I’ve reached the point where I’ve determined keeping receipts is silly excess work, and stopped doing that. I have a large 401k, decent sized Roth IRA, decent size taxable brokerage, and a good amount in cash (e-fund). The HSA is cool and all, and I’m not spending it down, but… I have so many options to pull from, I don’t see me ever getting to the point I’ll need to withdraw from it “early”. The like point that will happen is a huge medical expense, especially as I age, but, you know, that’s what it’s there for, so it’s a non-issue.
So I just contribute and invest the funds. I’m sure I’ll have plenty of medical expenses when I’m in my 60s/70s/beyond.
Unless you have a couple of large out-of-pocket medical expense receipts that you should keep, there is no need to save every single receipt for decades. You will have plenty of healthcare related expenses once you retire to draw down your HSA funds….dental, vision, hearing aids, Medicare premiums for Part A, B, C, and D, copays, and deductibles.
Personally don’t like doing that. I prefer current tax year receipt to be together and not worry about past tax years. I don’t have a ton of expenses so it’s grown well. 55K now hope to have it much higher in ten years. It’s one of those accounts you’ll want to spend down pretty quickly in retirement as it will give your heirs an immediate tax hit when you pass (assuming you aren’t married that is).
I track all of mine. I put the bill and payment receipt in a folder on my computer and label it with the dollar value. At the end of the year I put all the folders in a folder labeled with the year and the dollar value total. I’ll keep doing that as long as I’m on an HSA. No reason to pay others taxes.
I think most HSA’s can be invested in the stock market, but not all. Can yours be invested?
40 with a spouse and two kids. I use my HSA for medical payments. I keep $1000 on the cash side and move excess to the investment side. I don’t actually know the best way to maximize the plan but this made the most sense to me. As bills go down more is transferred. Based on the responses here I should do some more research.
I don’t think saving receipts is as difficult as it seems. It’s not like you have to scan and file every $10 prescription. Log into your pharmacy website or app every so often and download the previous year(s) of expenses. CVS for example juts let me download 3 years of itemized pharmacy expenses. Ditto for your health insurance company; they keep a record of all your provider bills. Or find them directly with your provider website if you prefer something more detailed. If you miss a few here and there, oh well.
So just set a calendar reminder around tax time or something and download one or two files and throw them in your cloud storage account of choice.
Redeem it now and put it in your Roth if you don’t need it yet and haven’t maxed it out yet.
I set a lower limit to make it easier. Only individual bills over X dollars get archived. I don’t have the patience to scan a pile of piddling bills, nor will I have the patience later to submit a pile of piddling bills.
(That said, I was burned in the past by an overzealous FSA that demanded an unreasonable amount of proof to reimburse, so that is also partly driving my decisions. I don’t want the headache of being hassled about a hundred different receipts for fifty bucks a pop.)