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Whether you're a spreadsheet geek or someone who hates file folders, you're ultimately the one who's responsible for making sure your HSA funds are used correctly. Yes, that means you need to be pretty meticulous about keeping your HSA records and HSA documents organized!
For those rolling their eyes at one more chore to do, don't fret. Here are a few simple tips to get you organized in no time.
It sounds obvious, but before you go off and spend your HSA funds, make sure you understand what you can and cannot spend the money on. In order to be considered an HSA eligible expense, a product or service must meet the IRS's definition of medical care- in short, it must be primarily for the diagnosis, cure, treatment, mitigation, or prevention of a medical condition.
You'll also want to make sure that you can get a record of your purchase, like a receipt or an invoice. If you want to eliminate the guesswork, we have an extensive list of HSA eligible products. You don't want to get caught paying tax along with a 20% penalty on any purchase you can't prove was a qualified medical expense. If you're extra paranoid, keep the above list handy, either on your phone, or printed out and kept in your wallet.
It wouldn't be record keeping if you don't hold onto those records, right? Cheekiness aside, keep every single receipt and HSA statement like it's going out of style. You want to hold onto all those HSA records as long as your tax return is considered "open," which is about three years after you file, or as long as you have your HSA account.
Your current HSA plan provider may have a tool to store receipts on their portal. This can make record-keeping easier. Your plan can automatically upload some receipts, but as with all options, others you have to manually upload yourself. But there can be drawbacks: If you change jobs and change HSA plans or if you have multiple HSA accounts. To help solve this challenge, HSA Store offers an Expense Dashboard to securely store your receipts, wherever you spend, whatever HSA plan you have, over time.
No matter where you store them, you want to ensure they protect your private health info and are stored at a company you trust. No matter where you store them, you want to ensure they protect your private health info and are stored at a company you trust. As for what HSA documents to keep, hold onto HSA purchase receipts, HSA account statements, employer contributions, and documents that explain services or products you've paid for.
Keep a backup of those files, too. For example, if you have digital copies, you may want to print a copy and vice versa. That way, you still have HSA records in case your computer goes on the fritz, or your cat decides to use your file folders to sharpen their nails.
Creating folders, digital and physical is really crucial to keep your HSA documents organized. On top of that, having a process in place will make record keeping less of a pain.
Here are some suggestions on how to organize your folders and files:
That's it! Not too painful, is it? For those against taking on more paperwork, consider this: If the IRS ever decides to come knocking, you'll want to avoid all possible headaches by showing them exactly what you spent your HSA money on. Having proper records means — in the event that does happen (let's hope not!) — you just hand those over and the proof is there, keeping you organized, and out of trouble.