Getting More Value Out of My HSA After Spending All of My Funds

About 30-35% of all health savings account (HSA) users fund their HSAs at some point, and spend all their funds within that same year. These account holders typically start with a basic plan of their expenses for the year, then spend accordingly. Most of these users plan to spend an exact amount for certain qualified medical, dental, or vision expenses, and have no intention of leaving any money in the account at the end of the year. 

It’s time that we look at spending a little differently, and it all starts with increasing spending power and saving receipts from eligible, out-of-pocket purchases.

Increasing spending power

These types of account holders have a big advantage over most people: the ability to budget for expenses. Because these users are familiar with budgeting and anticipating annual medical, dental, or vision expenses, they are more likely to be successful at creating that same budget, but with dollars from their paycheck as opposed to their HSA. They may also question, “Why do that?” Well, this is how you increase your spending power.

You can either pay for all of your eligible expense with your paycheck dollars (or taxed income), a 50/50 split between your paycheck dollars and your pre-tax HSA dollars, or whatever combination of spending works best for you so long as at least some of your eligible expenses are paid out of pocket without using your HSA funds. But the important thing to keep in mind here is that the more you spend out of pocket, the more your HSA funds grow untouched, tax-free. This gives you a bigger bank of pre-tax funds to borrow against whenever you need it, thanks to HSA reimbursement (we’ll get to this later).

Pro tip: When purchasing these eligible items out of pocket, opt for a credit card that earns you rewards points for all of your daily purchases. 

Here are a few other important tips to keep in mind with this strategy: 

  • HSA funds don't expire - The dollars that aren’t spent rollover annually and earn interest, tax-free
  • That means your HSA contributions aren’t going anywhere, so don’t worry about needing to spend them right away
  • Unlock spending power - Purchasing items out of pocket allows you to build up a bank of stored expenses that you can reimburse yourself with from your HSA. By reimbursing yourself with HSA dollars, you are paying yourself back with the same pre-tax dollars that you would use if you shopped with your HSA card. That means the 27% in tax savings goes right into your pocket either way.*
  • Keeping records - Saving receipts makes filing taxes each year easier — we can help with this too

Saving receipts and getting HSA reimbursement right

This strategy works with all eligible expenses including your current essentials, certain medical services, and thousands more products you never knew were eligible. Start exploring the world of eligibility and just how many of your everyday essentials and medicine cabinet favorites are eligible for reimbursement. The best place to start is with our Eligibility List — the web’s most comprehensive list of products and services eligible for tax-free spending. 

HSA Store carries all of your favorites with a 100% eligible guarantee from eligible pain relievers to sunscreen, and much more. It gets better. We even help you track and store all of your receipts from purchases made at HSA Store in one safe place: our Expense Dashboard.

From this point, if you ever need to pull funds from your HSA for any purpose, you can request a reimbursement from the HSA into your checking account, for any amount you have as "Eligible for Reimbursement" (assuming you have that amount in your HSA)

  • Match up the amount you pulled to receipts for expenses you paid out of pocket
  • With our Expense Dashboard, you can keep easy records: simply mark the items as "Reimbursed from HSA" and your “Eligible for Reimbursement” value is automatically updated

And just like that, you have effectively increased your spending power. You can use HSA funds for any purpose at any time so long as your reimbursement request doesn’t exceed the unreimbursed eligible expenses you’ve accrued.

Note, we are not tax professionals, nor should this article be considered professional tax or financial advice. To find the best solutions for your needs, be sure to speak to a qualified tax or financial professional before making any decisions.

*27% in tax savings assumes pre-tax HSA contributions, a 22% federal tax and a 5% state tax (does not contemplate APR or effective rate of return). For illustrative purposes only. Individual earnings may vary. Note: Pre-tax HSA contributions not used for qualified medical expenses are subject to a 20% income tax penalty.


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