Can I Pay 2017 Bills with 2018 HSA Contributions?

As a user of a Health Savings Account (HSA), you may wonder whether you can use your 2018 HSA contributions to pay for expenses incurred in 2017. The short answer is no, you cannot use the current year's contributions to cover expenses from the previous year. Let's delve into the details to understand why this is the case.

HSAs are designed to help individuals save and pay for qualified medical expenses on a tax-advantaged basis. Here are some key points to keep in mind:

• HSA contributions are made with pre-tax dollars, offering a tax deduction in the year they are made.
• Withdrawals from an HSA for qualified medical expenses are tax-free.
• You can only use funds that are already in your HSA to pay for eligible expenses.
• Contributions for a particular year belong to that year and cannot be retroactively applied to expenses from previous years.

Therefore, if you incurred medical expenses in 2017, you would need to use funds that were contributed to your HSA in 2017 to cover those expenses. Contributions made in 2018 can only be used for expenses that occur in 2018 or later.

It's important to keep track of your HSA contributions and expenses to ensure compliance with IRS regulations. Using HSA funds for non-qualified expenses or incorrectly applying contributions to past expenses can result in tax penalties.

Ultimately, the primary goal of an HSA is to help you save for future medical costs while taking advantage of tax benefits. By understanding the rules surrounding contributions and withdrawals, you can make the most of your HSA funds.

When managing your Health Savings Account (HSA), it's essential to understand the rules governing contributions and expenses. For instance, payments made in 2017 cannot be settled with contributions from 2018. This sets a clear timeline for your HSA funds, limiting their use to the specific year they were contributed.