ULPT: HSA Hacks
Posted by WiffleBallZZZ@reddit | UnethicalLifeProTips | View on Reddit | 75 comments
Ok, let's say you have thousands of dollars in an HSA. The money is all pre-tax, so you don't pay taxes as long as you spend the money on a qualified medical expense.
From what I can tell, HSA's basically use the honor system, meaning you can withdraw the money whenever you want to, and you can spend it on anything as long as you don't get caught. There are no controls in place.
Let's say you withdraw $2000 from the HSA and transfer it directly to your regular bank account. Then you buy some type of heart pressure monitor device, or whatever. Then you return it, so you have the money back - but you keep a copy of the receipt.
Then you spend the $2000 on a new dirt bike, saving you $500 in income taxes that you'll never have to pay on that money. And if you get audited (which is unlikely), you can show the IRS a copy of the receipt that you kept. Am I missing anything?
MikeHock_is_GONE@reddit
my HSA can't be transfered to a bank acct
Specific_Ad_3312@reddit
You should be able to reimburse yourself if you use your own money.
Mousetradamus@reddit
LPT: keep your HSA. Invest the money within it. It’s triple tax advantaged. Use its possibility of growth to your advantage
AreYouAllFrogs@reddit
Then, buy a dirt bike during your 3/4 life crisis using the money
Mousetradamus@reddit
This guy gets it
birdseyeblind@reddit
Hi, I work for a well known TPA who administers HSAs. This is very risky. You can withdraw funds from you HSA and the burden is on you to keep documentation that it was spent correctly, we do not ask for proof. BUT if you are audited and can not verify ever penny taken out, you're gonna be hurting. This includes if your employer is audited. They sponsor your HSA which makes it subject to their audit.
breakermw@reddit
Don't HSAs usually need you to upload the receipt to their portal? At least every one I have ever had made this mandatory to get the reimbursement.
YsTheCarpetAllWetTod@reddit
He would have a reciept. Read the post
jersey_dude88@reddit
Again, OP clearly stated HSA not FSA. I think we have a few people conflating these terms.
Think_Reporter_8179@reddit
FSA's often do, not HSA's.
YsTheCarpetAllWetTod@reddit
Yea but a reciept showing the purchase is enough. Is he keeps the original reciept that is perfectly acceptable as proof. And the employer is irrelevant since Hippa protections prevent your employer from requesting or accessing anything related to medical conditions.
Seems perfectly safe, as long as you always get a reciept
WiffleBallZZZ@reddit (OP)
If I was audited I could just show them the receipt though, right? They aren't going to come to my house and ask to see the actual item.
Substance___P@reddit
For me, my FSA card company asks for receipts seemingly at random, and for all large purchases (e.g. like >$300). It's not like your tax return is audited, I have to prove the funds were used appropriately throughout the year.
jersey_dude88@reddit
Wasn’t OP talking about HSAs? HSAs and FSAs not quite the same.
Substance___P@reddit
Oh snap you're right. He did say HSA. I must not have been wearing my glasses at the time.
Cross_22@reddit
My FSA was extremely annoying about that. For every other dental bill I paid with an FSA debit card they demanded an itemized bill faxed to them or they would keep pestering me.
However, their system was also very broken in that this fax automatically created a line item in their online portal where you could click "Reimburse" and they would send a check to reimburse the charge a second time...
400HPMustang@reddit
My FSA is weird. $800 dental bill? No problem. $40 monthly prescriptions? Gonna need that receipt.
kija2014@reddit
Sometimes that has to do with the point of sale system used - if your transaction isn't coded as FSA eligible, receipt needed.
Some FSA providers will also recognize transactions at a previously used point of sale and approve automatically, while transactions from new ones require verification.
400HPMustang@reddit
Yeah same script, same pharmacy, doesn’t always need the receipts but I believe what you’re saying.
moomooraincloud@reddit
Yes
4DogNight1313@reddit
No further advice to give, but hello fellow TPA colleague! Hope you're thriving and surviving this time of year :)
LossPreventionGuy@reddit
real question
I have an HSA with like 6k in it but my company stopped doing HSAs this year so it's just sitting there not being added-to anymore
can I pull it into my 401k or something or am I stuck with it? I'm probably going to forget it exists eventually if I just leave it there
germantechno@reddit
Roll it over to Fidelity, they have a no fee HSA account. With any transfer / rollover, initiate from the receivers side, (pull the funds, don't push them).
MayorNarra@reddit
I’m pretty sure you can roll in into a Roth or pull it out as cash but pay income tax on it. Check r/personalfinance. I’ve seen this question addressed there.
Garlicinajar@reddit
Make sure you're not being charged a monthly fee! I used to work for a company that offered an HSA. When I left the company the HSA provider started charging me a monthly fee.
LossPreventionGuy@reddit
thanks good tip
WOAHdude0197@reddit
I have a question for the Hsa knowledgeable ppl. When I use my HSA card at Walgreens for a covered purchase, do I still need a receipt? I thought if it wasn’t an eligible item the card wouldn’t go through.
wlooura@reddit
They can audit everything but they are too lazy too probably. Never heard a case of someone getting caught doing what you mention but I have heard of people being force to pay back the money to HSA or pay taxes. Something like that. Correct me if incorrect
Pure-Ad2249@reddit
Not just this, but the GOP is about to further gut funding to the IRS. Rich people dont want to get audited either. Look at their history, they’ve continued to defund the IRS and prevent hiring of new auditors. It’s about to be open season for tax fraud.
PoliticalDestruction@reddit
What are the chances they abolish the IRS? Can’t come after taxes if there is no IRS right…?
That will be great for the deficit
MikeHock_is_GONE@reddit
they will limit it to the poors and mids being audited
PoliticalDestruction@reddit
Yeah, I remember it mentioned somewhere that reduced funding hurts the IrS ability to pursue complicated tax returns and such… so the rich people.
My plan to be rich though is to just be born rich, that’s how others did it, check back in 20 years in my progress
MikeHock_is_GONE@reddit
good plan. My plan is to win the lottery
Baloooooooo@reddit
0 chance. They'll keep at least a skeleton crew around to harass their political rivals. And they definitely want that tax revenue from the poors.
Any_Key_9270@reddit
A bunch of absolute brokies talking about taxes and the deficit lmao. It's incredible. The deficit has not gone down in how long? Apparently it's not working. It's not rocket science. We need to manufacture and export more than we import. We are a nation of consumers. As with any business, if you don't produce, you go to $0. It's really that simple. Then there's the tariff argument, but I already know how that's going to go with a bunch of people who can barely afford to pay their pathetic student loans back.
Pure-Ad2249@reddit
I’ll point out two things: 1) we are primarily a service based economy, not primarily a manufacturing based economy. The only manufacturing that remains here is value dense and relatively non labor intensive. 2) I personally no Americans - thats zero people - who have any interest in all at working in a labor intensive factory
ImShero77@reddit
I think this is biased to where you live. I am surrounded by folks that work in factories and actively seek out the work.
Pure-Ad2249@reddit
Yes, but “working in a factory” is very different than actually performing labor intensive manufacturing… which is the exact reason these jobs were off-shored in the first place. Yes there’s engineers, mechanics, management etc who work in US factories, and some actually assembly workers, but in the factories that have survived these assembly workers are almost always operating complex manufacturing machines such as molds, robots, mills, etc. These assembly workers in the US are almost never physically assembling by hand labor intensive tasks, for example sewing a pair if work gloves. When they are physically assembling its for extremely value dense technical products like cars or airplanes. These things are already being made in the US because the market naturally determined this, just like the market decided Nike sneakers are made in Asia
Kobalt1911@reddit
Now you know me, I do industrial maintenance. I live for this sure it sucks carrying a 350lb motor up 7 flights of stairs but i will never ever ever go back to retail or any job where i have to talk to people again
Pure-Ad2249@reddit
Industrial maintenance still isn’t actually being in the assembly line. You’re repairing the machines in a factory, not sitting behind a sewing machine making jeans.
Lunakill@reddit
I mean, I might. If the pay and benefits are good. Which they’re usually not these days.
Lunakill@reddit
If they do that, they’ll sell a contract to some private firm that has board members who verbally fellate Trump juuust right. He won’t care how good they are at math or taxes.
Vegetable-Match-2055@reddit
That sounds… terrible…
Azure4077@reddit
Not how HSA works but okay lol
baby_blobby@reddit
You just invented money laundering
Hot-Persimmon-4870@reddit
Simple, buy a bunch of medical shit from Amazon, get the receipt and submit to your FSA/HSA, cancel the order before it ships and have them refund everything to your Amazon balance instead of the original payment method.
RonPaulBunyan@reddit
Adobe Acrobat Pro - take a receipt from a provider for something that could theoretically be charged monthly and change the date every month and resubmit it. I’ve been riding the same purchase of boner pills for going on 4 years now whenever I have unspent funds. Especially if you have different insurance and FSA/HSA management companies.
ortho_engineer@reddit
The purpose of an HSA is to serve as another tax free long term investment vehicle. Don't actually spend it until you are of retirement age.
I mean if you absolutely have to, then fine. but this is some "rich dad, poor dad" shit. don't touch it until you retire, for real. I have been maxing mine out for over a decade and it has grown to be a decent contribution to all of my retirement savings because I'm not wasting all that compound growth out buying bandaids and prescriptions with it... and I still have 30 years of growth left.
you can save all your receipts along the way and expense them when you do finally withdrawl. I had a ligament repair surgery last year, and those receipts are in a lockbox to wait around a few decades lol - but enough of them will let me withdrawal everything at the end without having to buy tons of medical supplies right as I retire.
Comfortable-Cap-8507@reddit
Will this work for an FSA?
GingerBoots333@reddit
If you return the heart monitor, won’t the money just go back on your HSA card? What retailer is giving cash refunds for stuff that you charge?
Backpacker7385@reddit
You don’t need to use the HSA card to pay for the heart monitor, you can pay however you like and then reimburse yourself from the HSA funds.
CIWA28NoICU_Beds@reddit
Can you take out a home loan, transfer it to the Caymen Islands, and then live high in a low cost of living country.
So_spoke_the_wizard@reddit
You're really hurting yourself when you do that. If you leave it in there, you can put it into investments once a certain amount is reached ($25k?). Let it grow. If you are younger, even better. Because once you retire, you can use it to pay for health care costs including insurance premiums. With where we are headed with the ACA and Medicare, you'll be happy you did.
wolf_metallo@reddit
How are people getting HSA without high deductible Med plans? With my company plan, the high deductible is so expensive that I surely lose all benefits of any HSA! it's Pike 600 per month premium and then 10000$ deductible. Then plan pays only 80% of costs. By any logic, I don't coke ahead coz after spending this much on premiums and deductibles after tax, I'm having no money left for HSA!
Who is using HSA? And how?
So_spoke_the_wizard@reddit
It definitely requires some detailed number crunching and needs assumptions to see if it works for you. We took our medical needs projections and ran them through our standard and high deductible policy scenarios. If our actual usage went one way or the other, the best choice would change. In the end we went with the high deductible.
My HD plan is better than that. Plus factoring in company contributions to the HSA in addition to the tax deferment of our own contribution made it a winner.
WiffleBallZZZ@reddit (OP)
That's a very good point - although, many people don't have enough extra income to contribute the maximum amount every year. But they could still put the money in, take it right back out, and spend it.
fig-lous-BEFT@reddit
Existing money left in the HSA can still grow tax free. Taking it right out is still screwing themselves since they could have earned more than what they spent.
jnee23@reddit
I can invest anything over $1k $25k is insane
So_spoke_the_wizard@reddit
The way it works is you keep contributing to the HSA and try to pay as much of the small things out of pocket as possible. Save the HSA for the major items. Over time it will build up. When it hits a threshold that I don't remember for sure, you can have money in the account invested in securities to help it grow faster. It might take five, ten, fifteen years to reach that amount. But the point is to play the long game and save it as much as possible for retirement health costs.
jnee23@reddit
No I understand that. I’m saying the threshold being 25k for anyone is insane. My threshold is $1k.
Hedhunta@reddit
Correct me if I'm wrong, but didn't the ACA create HSA's? Won't they disapear if that is repealed?
So_spoke_the_wizard@reddit
Good question. I had to go back and look. The preceded the ACA and were part of the Medicare Prescription Drug, Improvement, and Modernization Act signed by President Bush in 2003.
Boulderdrip@reddit
well this is just fraud and the IRS will fuck you. but have fun for a couple months before you get caught. poor people like us don’t get the pass, that’s only given to rich and famous people
trymyomeletes@reddit
You could do this with any tax deductible purchase. It’s all “honor system.”
WiffleBallZZZ@reddit (OP)
That's true. I guess it just seems different with an HSA, since you have already avoided taxes when you put your pre-tax money into the HSA. At that point you can very easily take it out and spend it, and you don't need to file an itemized deduction like you would with other stuff.
reijasunshine@reddit
I have an FSA, which is similar to an HSA, but different. I went to urgent care, paid my copay using my FSA debit card, got xrays and a prescription and went on my way.
A few weeks later, I got a check in the mail, from the urgent care company, for the exact amount I'd paid. There was no explanation.
I asked my work's HR person what to do, she reached out to our insurer, and apparently the money was all mine in their eyes. I scored a couple hundred bucks just from injuring my hand.
DecrepitHam@reddit
I just bought wheelchairs and sold them
AfraidChocolate370@reddit
You will not get audited. Its a waste of time and resources to go after someone who technically used their hsa account correctly. For the last 5 years i've been doing the same. I photoshop fake medical invoices for about $1-2k a year and have never got caught. I am relatively young and healthy and i usually contribute about 4k so i figured i might as well use it on something else. For those asking why i don't invest the answer is a i do. And the end of year what ever is left in the hsa i invest it.
plumdinger@reddit
A trained auditor will spot the change in your cash flows from acquiring and operating the motorbike. Auditors are like superheroes - that is how cool are the myriad ways they have to prove something you’re trying to hide.
farstate55@reddit
What a mean joke. That’s just mean, man.
CraftKitty@reddit
We're all going to need healthcare as we get older. It's one of the things we spend the most on in our lives. Why waste the money on nonsense even if you can get away with it?
This is awful advice.
Aetheldrake@reddit
Almost like it's an....unethical.....subreddit
North_Ad_4450@reddit
You will get away with it
Hedhunta@reddit
Actually 2k can you get you pretty decent used on on marketplace if you are at least a little mechanically inclined. Or buy one of the Chinese electric ones on Amazon they are actually pretty rad for what they are.
solamarvii@reddit
You won't need to do all that.
Just transfer it. There is a 99% chance you won't get audited, especially if your AGI doesn't fluctuate year to year.
If you are ever audited claim you bought contact lense solution, band-aids, aspirin, poison ivy spray, vitamins, etc.... And that you did so over the course of the year.
The $2000 is FAR too small to be worth making a deal out of.