Hello,
I have searched the internet and (mostly) Reddit for answers to the question I am about to ask below, but so far haven't been able to: (a) either ask it in such a way that I get answers to my questions (the search results seem to misinterpret what I am asking), and/or (b) find anyone who manages their HSA the same way I do, AND WHO IS ALSO in a similar situation to mine (re: quitting a job).. so I figured I would make my own post and use lots of words to explain my situation in hopes that someone understands what I am asking and can answer my questions.
Thank you in advance to anyone who reads this novel and is able to comprehend it and help answer my question…
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I took a new job last May and my husband and I decided to go with a HDHP with an HSA. At the time we elected this plan, we were already seeing doctors and specialists to get to the bottom of some pretty significant health issues we had been having since COVID (my husband more so than I was originally). Eventually, the discoveries my husband was making on his health journey led him to more doctors and specialists. Then, around July, I started having much more significant health issues that then led me to see more doctors and specialists. More on that later.
So even though my husband and I were going to the doctor a fair amount at the time I started this job (knowing full well this wasn't a healthcare plan recommended for people who see a doctor frequently), part of the reason we settled on the HDHP with the HSA was for the tax benefits (plus, my sister vouched for it as someone who had used one for years (and loved it for the flexibility it offered to use HSA funds on so many other health and healthcare-related expenses (and…for the tax benefits))). We figured because other healthcare plans also require you to meet a deductible and we were in a financial position to be able to afford the HDHP, that we might as well get some tax benefits out of the deal.
I'd like to explain the way I run our HSA account and how my situation is changing, so that I can get some advice from the audience and make the best educated decision on how to move forward.
As mentioned earlier, my husband and I are in a financial position to be able to afford the higher deductible and this means we are also able to afford to pay out of pocket for our healthcare visits and reimburse ourselves later. I devised a method of payment/reimbursement that would provide other financial benefits than just the tax ones that come with the HSA:
- We use a credit card to pay our medical bills (one that offers either cash back or airline points (so we are maxing out our credit card benefits, not just getting the tax benefits native to the HSA)).
I try to reimburse myself from the HSA account as soon as the money hits my HSA account every pay check (I get paid 2x/month).
*It should be noted that I am aware that I have the option to invest the HSA funds that are over the set reserve limit, but my husband and I are pretty risk-averse and not very investment-literate, so we feel that having our HSA reimbursement deposited into a HYSA with a guaranteed monthly return is more palatable than investing it into the market which could turn south at any time due to the volatility of economies and markets, etc. (fully acknowledging that with some time and effort to educate ourselves on investments we might change our tune). A lot of people recommend you invest all your HSA funds (that aren't needed for medical expenses (most people advise against going into medical debt ILO some deferred growth)) until you are well beyond your working years then cashing out all your receipts and collecting your funds. This is usually the other selling point for the HSA – for people who never go to the doctor, it can provide some serious investment gains. That, however is not the case for us so (for now) we will just stick with the tax gains.
How my situation is changing (advice needed!)
I'll start by saying that in 2025 I was not contributing the IRS' max amount to the HSA, but in 2026 I increased my contributions to the IRS' max limit (which itself had increased). We did this since our medical bills have accumulated faster than the monthly contributions have, so we wanted to be able to catch up to reimbursing ourselves for all the expenses we have put on our credit cards so that money can sit in our HYSA and grow.
My employer also contributes $100/month to the HSA account so in 2025 my total contributions were $500/month, and in 2026, my monthly contributions are $729.16
There is a high probability that I will have to leave this job since it does not provide me with the work-life-health balance that I have since developed a need for since taking the job a year ago. My husband and I are weighing the following:
-NEED:
Due to mine and my husband's health conditions, we have a need to relocate to a sunnier, drier climate for part or most of the year, returning to our current city in the late spring/early summer and staying through late summer/early fall (when the rains return to the area and persist for the next 8 months). We have lived here for 10 years so we consider this home (and probably always will), so we want to maintain some sort of life here even if it is for only part of the year. However, our health worsens when the rains come so we are actively pursuing where to make our second home. We have a few options in mind, but relocating will require me to quit this job since I have been told I cannot work remote.
-COMPLICATIONS and QUESTION
My next job might offer a HDHP, in which case I would just bring over my current HSA and start contributing to it again. But it might not, or I might not take a job that offers benefits at all (or remain unemployed for a period of time), so I am unsure of how to reimburse myself for all the medical expenses I have incurred under the HSA plan that I have 'fronted' with a credit card, but not yet reimbursed myself for by the time I quit this job. Currently my HSA account balance is sitting at $422.48 and my unreimbursed totals are at $2164.21 (paid via CC). We have also had about 5 doctor visits that we have not been billed for yet, so that will be additional funds to pay on the credit card and eventually reimburse ourselves for. So, if no other expenses were incurred the rest of the year, it would take about 3 months for my HSA contributions to catch up to that $2164.21. I know for sure I won't be quitting sooner than 3 months, but I know we will be incurring more medical costs before the winter, which is the most likely time I would quit my job due to the unfavorable weather that affects my health.
Hypothetically, let's say I quit my job but have $400 in unreimbursed medical expenses (paid via Credit Card, pending reimbursement from my HSA account)…but because I am no longer employed, I will be unable to contribute the $400 to the HSA account via my paycheck, and thus unable to reimburse myself for that $400.
If I have a new employer who contributes to the HSA account, is it 'legal' to use their contributed funds toward the backlog of medical expenses I have that were incurred while I was working for my former employer (which would be $400 in this hypothetical situation)?
However, what if I don't ever become employed again with an employer that that I can just move my HSA to? How do I recover that hypothetical $400 if I have to fund my HSA account with post-tax dollars (from my HYSA) just to turn around and reimburse myself out of the newly funded $400 in the HSA account? I know I can't 'double dip' by taking a tax deduction on my tax return if I have taken a tax-free reimbursement on my HSA, but I don't think this is the situation I am facing. I don't ever want to fund my HSA account with post-tax dollars but what do I do about that $400 that I basically owe myself out of an HSA account that is no longer growing with pre-tax contributions? What do I do about that situation on my taxes?
>end<
Posted by apanda1000
3 Comments
>If I have a new employer who contributes to the HSA account, is it ‘legal’ to use their contributed funds toward the backlog of medical expenses I have that were incurred while I was working for my former employer
If it’s the same HSA then yes. The only rule is you can’t reimburse medical expenses you incurred before the account was open. If you close your HSA and open a new HSA with a different employer then no, you couldn’t reimburse expenses you incurred before that account was open.
If you get a job that doesn’t offer an HSA and you no longer have any funds in your HSA then you can’t reimburse yourself. Simple as that.
> If I have a new employer who contributes to the HSA account, is it ‘legal’ to use their contributed funds toward the backlog of medical expenses I have that were incurred while I was working for my former employer (which would be $400 in this hypothetical situation)?
No, you must open the HSA before incurring the medical expense in order for that expense to be reimbursable from those funds.
> what do I do about that $400 that I basically owe myself out of an HSA account that is no longer growing with pre-tax contributions?
Reimburse yourself the $400. If that brings the HSA balance to zero, you can then close the HSA. You can always open a new HSA if you become eligible to contribute in the future. If the reimbursement is for eligible healthcare expenses there is no tax due. It might still get reported on some form, but there will not be any additional tax.
You should not use an HSA for current expenses. All you’re doing in that case is saving on the taxes of the contribution, that’s literally all you get out of it.
You’re missing out on 2 of the 3 tax advantages of an HSA!
You should also absolutely not be keeping it in a cash balance.
If you can’t afford to pay costs out of pocket, well the HSA isn’t free money, so its not helping you afford anything. (the only free money is if your employer contributes).
The best way to use an HSA is to pay for your expenses out of pocket. You can save all receipts. You can reimburse yourself anytime in the future, ideally with gains from growth.
You contribute the max every year. That gives you a tax deduction each year.
Then you let that money sit there and grow. It should be invested. Its there for decades! Its now growing tax-deferred.
Then when you retire, and your medical bills are higher, that’s when you use the HSA money…. all the gains from the decades of growth, totally tax-free.
That said…
HSA has nothing to do with your employer. It doesn’t matter what your job situation is.
If you have the health plan active, then you are allowed to contribute. If the health plan is no longer your active insurance, then you cannot contribute.
But the account is yours, to use whenever you like! But it has to be used on expenses incurred after its creation, not backdated.