HSA reimbursement can help you maximize your health savings account. Read through this article to ensure you understand this HSA concept.
Reimbursement 101
If you paid for a qualified medical expense without your HSA, you can reimburse yourself for this expense. For example, if you forgot to bring your HSA to the dentist's office for a dental cleaning, you could pay with your credit card and then reimburse yourself with your HSA later.
No reimbursement deadline
You can pay out of pocket for a qualified medical expense today and reimburse yourself 20 years later. There is no ticking clock for HSA reimbursements.
HSA establishment date
The only requirements for HSA reimbursement are:
Your HSA was established at the time the expense was incurred (see more below).
The expense was not reimbursed in any other way.
Remember to always hold onto your receipts!
Incurred vs. paid
There is some debate about when an HSA should be established. Should it be established when the expense is "paid" or "incurred"?
To be safe, we suggest adopting the conservative interpretation that the day the expense is incurred is when the HSA should be established. (This usually means ensuring the HSA is established by the date of the service.)
Definition of HSA establishment
IRS definition of HSA establishment
"State law determines when an HSA is established."
An HSA is considered an exempt trust under state law, and most state trust laws require that a trust be funded to be considered established.
Because this is the case, we highly recommend that each person opening an HSA fund the account with as little as one penny ($0.01) to consider the HSA established. Any expense incurred thereafter can be reimbursed using HSA funds at some point in the future.
Professional services reminder
This article should not be considered to be legal or tax professional advice. It's always best to review your situation with a tax and/or legal professional.
Source: IRS Notice 2004-50 Q&A 39