When you sign up for a high deductible health plan (HDHP) and aren’t enrolled in Medicare or have other health insurance, you may be eligible for a HSA.1 HSAs are savings accounts that grow tax-free, where you can set aside money to help pay for qualified medical expenses.
HSAs have many advantages: Contributions made into your HSA by you or someone other than your employer can be claimed as tax deduction. If you invest those funds, they grow tax-free.2
If you use the money for qualified medical expenses, you don’t pay taxes on it. Plus, if your employer contributes to your HSA, that money is not considered part of your taxable income.1
While most HSAs come with a debit card to cover eligible expenses, if you don’t happen to have your card with you when you need to pay for something, you can always file a reimbursement claim.
What are HSA reimbursements?
An HSA reimbursement is when you get reimbursed from your HSA to repay you for medical costs you paid for out of pocket. HSA reimbursements can be requested for eligible expenses incurred anytime after you’ve opened your HSA,1 whether that’s 2 weeks or 2 years later.
If you don’t have enough money in your account when you pay for the medical care, don’t worry. You don’t have to file for a reimbursement right away.
Since there are no time limits on HSA reimbursements,3 you can submit a reimbursement request to your HSA for qualified medical expenses months or years after you’ve paid for them out of pocket.
This allows you to be strategic with your withdrawals. You can wait until your funds grow, for example, before requesting reimbursement for an expense that might not have been fully covered at the time. Or, you might choose to wait for a year when you’re a little tighter on income to request reimbursements.
When are HSA reimbursements necessary?
HSAs often give you a debit card to make paying for qualified medical expenses easier. But there may be times when you aren’t able to (or don’t want to) use your card.
Some situations where you might choose to pay out of pocket include:
- You forgot your HSA card at home.
- A doctor’s office or business doesn’t accept HSA cards as direct payment.
- You want to let the money in your HSA grow more.
- You’re being strategic about your reimbursements, waiting until a later time when you need the money more.
- Your HSA card has been declined.
- There is not enough money in your HSA account to cover the expense.
Another example of when you might seek an HSA reimbursement is for qualified medical expenses, known as “capital expenses.” These are costs associated with special equipment installed in your home for medical care for you, your spouse, or a dependent.4 In this situation, you may have to pay a contractor out of pocket to build features like entrance ramps for your home. If you do, you can submit the final costs to your HSA for reimbursement consideration.
What’s eligible?
Any expense that is covered by your HSA can be paid back through a reimbursement if you pay for it yourself (out of pocket).4
The Internal Revenue Service (IRS) defines qualified medical expenses as the costs to cure, diagnose, mitigate, treat, or prevent physical and mental disability or illness.4 When it comes to your HSA, qualified medical expenses are typically the same as those that would qualify as a medical or dental deduction on your taxes.3
Examples of eligible medical expenses include:4
- Dental treatments
- Vision care
- Diagnostic services
- Hospital services
- Surgery
- Psychiatric care
- Annual and sick exams
- Long-term care services
- Capital expenses
Examples of ineligible medical expenses include:4
- Cosmetic surgery
- Health club memberships
- Maternity clothes
- General wellness nutritional supplements
- Non-nursing household help
- Child care
There can be exceptions to these rules. For example, if your doctor advises a health club membership as a part of treatment or recovery from a specific medical condition, you may be able to submit the membership fee to your HSA for consideration.
How to reimburse yourself
How you go about getting an HSA reimbursement can vary depending on your HSA provider, but it generally involves the following steps:
- Confirming your expense qualifies for reimbursement by contacting your HSA provider.
- Gathering all supporting documentation, such as receipts, invoices, and any explanation of benefits (EOB) statements.5
- Logging into your HSA account through an online portal or mobile app.
- Navigating to the reimbursement request forms and fill out the required information fields.
- Uploading any requested supporting documentation.
- Reviewing the confirmation and save a copy for your records.
It’s always OK to call your HSA provider directly to make sure they got your reimbursement request, or to get an update on its approval status. The time it takes your HSA provider to process the claim and issue a reimbursement can vary.
Can I toss my receipts after I’ve received my HSA reimbursement?
Keep all the papers related to your HSA payments even after you get paid. HSA reimbursements fall under the jurisdiction of the IRS, so if you get audited, you’ll need to show receipts.1
Are withdrawals from my HSA the same as reimbursements?
HSA reimbursements and debit card payments for eligible medical expenses are types of tax-free withdrawals from your HSA account. You can always withdraw from your HSA for other reasons, but some withdrawals are subject to tax.
You can use money from your HSA to pay for other, nonqualified expenses like rent or groceries, for example, but these types of withdrawals are reported to the IRS and receive income tax and a 20% penalty fee if you’re under 65 years old.1
Do I have to submit eligible medical costs for HSA reimbursement?
You’re never forced to request an HSA reimbursement for an eligible medical expense. It’s your choice if you want to pay for covered medical fees out of pocket.
HSAs are designed to help with health and medical costs, but they’re also a powerful savings vehicle for use later in life. Money in your HSA can be invested and grow tax-free for as long as it remains there.1
After the age of 65 years, you can withdraw from your HSA for any reason without the 20% penalty.6 You’ll still owe income tax on nonmedical expenses, but you can use the money that’s compounded over the years as you would any other retirement account.
Summary
HSA reimbursements are a type of withdrawal from your HSA that helps repay you for out-of-pocket medical costs. You can request reimbursement for any costs eligible for coverage under your HSA, and there’s no time limit on when you can make your request.
It’s OK if you don’t want to get reimbursed for all your medical costs. You can leave your money in your HSA to grow tax-free for as long as you want. If you save it until after you’re 65 years old, you won’t have to pay the penalty for withdrawals, even if they aren’t for medical expenses.
See if your health expenses qualify with our free medical expense tool.Search expenses