Do you use HSA for expenses or not?

[RogueDadMD]

MPMD wrote:

There some flexibility here that you’re not referencing though RDMD. If you collect receipts like I’m doing you have options: 1) True stealth IRA 2) True HSA being contributed to and withdrawn from on a yearly basis 3) Retirement health care 4) Withdraw from HSA up to receipts amount for future non-healthcare purchase Or frankly a combo of all 4.

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I actually think we're saying the exact same thing.

[FIREshrink]

That does seem to be the wise middle ground. But since I already have the receipts, actively tossing them feels difficult. Not saving them going forward may be my ticket.

[spiritrider]

ITEngineer wrote:

Atlas Axis wrote:

All you wonderful Doctors won’t need a giant HSA to cover medical expenses. You’ll have 401k’s, Roths, Taxable, other savings and of course HSA’s. It seems wisest to take the 40% tax break now because there are plenty of other accounts that will continue to grow over time.

I think I’m rambling……TLDR; Not for me, but do what you want! No judgement here.

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Then there is no need to do a Backdoor Roths either. After all, who needs tax-free income. Also, your 40% tax break happens on the front end no matter when you take distributions for qualified expenses.

To each their own, but don't begrudge those of us who engage in the trivial task of saving receipts. Also, it does not have to be all or nothing. Pick a dollar value under which you reimburse immediately. That could result in 80-90% less receipts, but deferring 80-90% of the total amount.

[ITEngineer]

Atlas Axis wrote:

It just seems ridiculous to save receipts for 20+ years.

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I tend to agree. I can understand if you're not going to claim the expense at this time, in an effort to let the HSA Grow for decades, you just pay out of cash flow and throw the receipts. But the effort to scan/track receipts for 10 years to claim them in 2028 is not what I want to be doing with my free time to claim them 10 years from now. I would not save them as paper as they will fade and could get destroyed. I guess having a folder in the cloud would keep them safe from disk failure once scanned in. But why would you submit them 10 years from now? Why not wait another 10 years? When does it end?

Won't almost everyone on this forum be fairly well off though? I'm looking at RMD distributions at 70 that will put me in the top 1-2% of income annually for the rest of my life and I only save 8% of my salary. That doesn't include Roth or Taxable accounts. Of course, I might get hit by a bus tomorrow  8O   And that's if I stop working at 60 (which seems unlikely but possible). All you wonderful Doctors won't need a giant HSA to cover medical expenses. You'll have 401k's, Roths, Taxable, other savings and of course HSA's. It seems wisest to take the 40% tax break now because there are plenty of other accounts that will continue to grow over time.

I think I'm rambling......TLDR; Not for me, but do what you want! No judgement here.

[adventure]

MPMD wrote:

A couple of people are talking about saving receipts like it’s a really onerous task.

 

1. Evernote/Dropbox

2. Evernote scan widget on your phone/any scanner app

3. Simple spreadsheet w/ date, note on expenditure, and totals

 

It takes ~45 seconds from start to finish.

 

For the hardcore DIY folks on this site maintaining digital copies of receipts seems like a pretty Jr. varsity task.

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This is probably the encouragement I needed to start.

[FIREshrink]

Saving receipts is "easy" when you're healthy. You have few receipts, and right - you're healthy.

Not so easy when you're sick.

One year alone we had hundreds of receipts. And when you're sick, don't feel well, etc, scanning receipts falls to the very bottom of life's priorities.

If you would like to scan my two foot stack of receipts, please be my guest!

[MPMD]

spiritrider wrote:

MPMD wrote:

If you collect receipts like I’m doing you have options:

1) True stealth IRA

In my never ending crusade to vanquish this term from the lexicon of humanity. If you have any other pre-tax assets you should almost never take non-qualified distributions from an HSA after 65. It would be extreme rare for this to be true for a physician.

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Thank you for the clarification, much appreciated.

I was mostly commenting on the flexibility of various options.

[Side Hustle Scrubs]

No one should feel bad about not being able to afford to pay cash for medical expenses. Life happens.

If you’re in private practice (and have a say in your benefits) there is no reason you should be paying for ANY medical expense ever.

Step 1. Have a high deductible plan with HSA

Step 2: Employer maxes out your HSA on your behalf

Step 3: Employer creates a medical expense reimbursement plan.

A medical expense reimbursement plan is separate from an HSA. It allows for tax free reimbursement for out of pocket medical expenses.

Any expense up to your annual deductible gets reimbursed tax free. Once you meet your deductible your insurance foots the bill. There’s never a scenario where the HSA needs to be touched.

I realize that ivory tower academics or people in large multi specialty groups may not have the luxury of having a say in their benefits. If you have to use your HSA don’t beat yourself up.

[jfoxcpacfp]

hightower wrote:

We use our HSA regularly for all out of pocket medical costs.  But, after reading this thread, I just realized I should be saving receipts for tax purposes.  I guess I wasn’t thinking about that.  Boy I feel stupid now.

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Just to clarify, you only need enough receipts annually to account for your withdrawals from your HSA. Keep those with your other tax documentation for each year. As for other receipts, I would, in general, recommend saving only the significant ones for use in the future ($100+) if you are emptying the account each year.

[hightower]

We use our HSA regularly for all out of pocket medical costs.  But, after reading this thread, I just realized I should be saving receipts for tax purposes.  I guess I wasn't thinking about that.  Boy I feel stupid now.

Guess we'll start doing so as of today ops:

[spiritrider]

MPMD wrote:

If you collect receipts like I’m doing you have options:

1) True stealth IRA

In my never ending crusade to vanquish this term from the lexicon of humanity. If you have any other pre-tax assets you should almost never take non-qualified distributions from an HSA after 65. It would be extreme rare for this to be true for a physician.

[MPMD]

Rogue Dad, M.D. wrote:

Atlas Axis wrote:

Yes we use it for expenses. It just seems ridiculous to save receipts for 20+ years. The money has value now. 

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I’m not sure but I feel like we are having different discussions.  The money has “value” now if you need it to pay expenses.  If you make sufficient money to pay healthcare expenses from cashflow, then the only question is what is the best way/place to save/invest the money for long-term use.

If you want to let the money grow and use it to pay for future expenses that may be higher or harder to save for when they arrive, then the HSA is the perfect place to park the $.  If you plan to use it to buy a boat and don’t expect many healthcare expenses that would allow accessing the money w/o a penalty, than a taxable account is probably better.

Click to expand...

There some flexibility here that you're not referencing though RDMD.

If you collect receipts like I'm doing you have options:

1) True stealth IRA

2) True HSA being contributed to and withdrawn from on a yearly basis

3) Retirement health care

4) Withdraw from HSA up to receipts amount for future non-healthcare purchase

Or frankly a combo of all 4.

[RogueDadMD]

Atlas Axis wrote:

Yes we use it for expenses. It just seems ridiculous to save receipts for 20+ years. The money has value now.

Click to expand...

I'm not sure but I feel like we are having different discussions.  The money has "value" now if you need it to pay expenses.  If you make sufficient money to pay healthcare expenses from cashflow, then the only question is what is the best way/place to save/invest the money for long-term use.

If you want to let the money grow and use it to pay for future expenses that may be higher or harder to save for when they arrive, then the HSA is the perfect place to park the $.  If you plan to use it to buy a boat and don't expect many healthcare expenses that would allow accessing the money w/o a penalty, than a taxable account is probably better.

[spiritrider]

Additionally, I would point out that you need to save proof of the expense and payment for three years anyway. Does it really matter how long you have to keep them?

Anecdotally, HSA CP-2000 Notices seem to be in the frequency ballpark of 529 CP-2000 notices. I have had both and know friends, colleagues and acquaintances who had one or the other. Neither is common, but neither is uncommon.

Now in that same circle, Backdoor Roth Form 8606 CP-2000 Notices seem to be more common. I don't know why with examples like WCI's excellent tutorial. Surprisingly, or not most of the people receiving them have had CPAs make the errors.

[MPMD]

A couple of people are talking about saving receipts like it's a really onerous task.

 

1. Evernote/Dropbox

2. Evernote scan widget on your phone/any scanner app

3. Simple spreadsheet w/ date, note on expenditure, and totals

 

It takes ~45 seconds from start to finish.

 

For the hardcore DIY folks on this site maintaining digital copies of receipts seems like a pretty Jr. varsity task.