Can I Pay This Year's Bills with Last Year's HSA? - Understand HSA Rules and Benefits

One common question many HSA account holders have is whether they can use funds from last year's HSA to pay for expenses incurred this year. The answer to this question lies in understanding the rules and benefits that come with an HSA.

Health Savings Accounts (HSAs) are valuable tools that allow individuals to save and pay for qualified medical expenses on a tax-free basis. However, there are certain guidelines that govern how and when HSA funds can be used:

• Funds rollover: The funds in an HSA account roll over from year to year, meaning you don't lose the money at the end of the year. This allows you to accumulate savings for future medical expenses.
• Timing of expenses: You can use funds from your HSA to pay for qualified medical expenses that occur after you establish the account. This means you can pay for this year's bills with funds from last year's HSA if the expenses are incurred after the HSA was opened.
• Reimbursement: If you paid for medical expenses out of pocket before opening an HSA, you can reimburse yourself from the HSA as long as the expenses occurred after the HSA was established.

It's important to keep records of your medical expenses and HSA transactions to ensure compliance with IRS regulations. By understanding the rules surrounding HSAs, you can make the most of this valuable savings tool.

Many HSA account holders often wonder if they can use the balance from their previous year's contributions for expenses they incur this year. Fortunately, the answer is yes, but it's crucial to understand the accompanying guidelines that dictate how Health Savings Accounts (HSAs) operate.