Can You Pay Previous Year Medical Expenses with Your HSA?

Many people wonder if they can use their HSA (Health Savings Account) to pay for medical expenses from previous years. The answer to this question is both yes and no, depending on the circumstance.

According to IRS regulations, you can only use funds from your HSA to pay for qualified medical expenses incurred after you opened your HSA account. However, there are a few exceptions to this rule:

• If you incurred the medical expenses after you were enrolled in an HSA-eligible high-deductible health plan but before you actually opened your HSA account, you can use HSA funds to reimburse yourself for those expenses. This is allowed as long as the medical expenses were incurred within 60 days of opening the HSA account.
• If you made contributions to your HSA in the previous year but had not yet incurred enough medical expenses to cover those contributions, you can use the excess funds in your HSA to pay for qualified medical expenses from the previous year. This is a good way to ensure that none of your HSA contributions go to waste.

It's important to keep thorough records and documentation of your medical expenses and HSA contributions to ensure compliance with IRS regulations. Consult with a tax professional or financial advisor if you have specific questions about using your HSA for previous year medical expenses.

Many individuals often ask if they can tap into their HSA (Health Savings Account) to settle medical bills from prior years. While the IRS sets certain guidelines, there are nuances worth noting.

Under current IRS regulations, HSA funds can only be utilized for qualified medical expenses incurred post the opening date of your HSA account. Nonetheless, there are notable exceptions:

• If you've incurred medical costs while enrolled in an HSA-eligible high-deductible health plan but before establishing your HSA, you are permitted to use HSA funds for those expenses as long as they occurred within 60 days of your account opening.
• If you’ve made contributions to your HSA from last year but haven’t fully utilized those funds for medical expenses, you can indeed apply those excess funds to cover qualified medical expenses from the previous year. This method ensures that your contributions don’t go to waste.

Maintaining accurate documentation and records of both your medical expenses and HSA contributions is essential for adhering to any IRS guidelines. If you’re unsure about how to properly navigate these regulations, seeking advice from a tax professional or financial advisor may be beneficial.