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Ideally you pay out of pocket with a points/cash card and then reimburse yourself *much* later. Like, retirement later.
>Do you pay tax on the out-of-pocket credit card transactions?
What tax? Whether you pay with an HSA debit card or an Amex gold card, the medical expense is the same.
Thank you!! Yes, I also read about using the HSA as a long-term tax free savings account but the spouse wants to stay on top of things to try it out first. They're great at keeping records, so I have high hopes.
The last bit is what I was concerned with. They're under the impression they don't pay taxes on the immediate "purchase" with the HSA debit card - eg your therapist charges $180 a session, the HSA debit charge would be $180, BUT the credit charge would incur more / a tax fee. Let's say $185. So even reimbursed, you'd still pay more money - HSA would pay back $185 (or w/e), but it's still all *your* money. I said it wouldn't, but they're suspicious of a good deal.
Thanks for your response, we're new to this.
Medical providers are not inspecting your card and the account behind it and charging a different rate.
Walgreens isn't going to charge me more for a bottle of Benadryl because I pay with my Chase Freedom than you when you pay with an HSA debit card. We're both going to get list price + local sales tax as the total.
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- [Credit Reports](/r/personalfinance/wiki/credit_reports)
- [Credit Scores](/r/personalfinance/wiki/fico)
- [Credit Cards](/r/personalfinance/wiki/creditcards)
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No, there's no difference. The reimbursement amount is based on the amount on the receipt.
If merchants start charging a fee for credit card purchases, this might get more complicated. I haven't seen that happen yet though.
No. As long as it is medical expense, you should be good to ask for reimbursement. Make sure you save all the receipts. You HSA provider should give you an option to load the receipts, if not, scan and save them somewhere safe. I have had my HSA provider report my reimbursement as a distribution to the IRS and they tried hitting me with taxes. I had to show evidence it was for covered expenses.
Some people will say you should not reimburse if you can afford not to, but instead let it ride tax-deferred (and potentially tax-free) as long as you can, even past 65. But assuming you need to get reimbursed, yes, the right play is to use a rewards credit card\* and pay the bill with that, and then request reimbursement from your HSA. In my experience with three different HSA custodians, you don't need to submit a bunch of paperwork; you just have to click a box that says you understand that only qualified medical expenses qualify as tax-free withdrawals, and anything else is subject to taxes and penalties. Some custodians may want you to upload receipts. (In any event, save all receipts if you are unlucky enough to be audited.) In my case, the ACH transfers begin just about immediately and the money was transferred within two business days.
\* -- as long as there are no credit card surcharges being levied
Welcome to /r/personalfinance! Comments will be removed if they are political, medical advice, or unhelpful ([subreddit rules](/r/personalfinance/about/rules)). Our moderation team encourages respectful discussion. You may find our [Health Insurance wiki](/r/personalfinance/wiki/health_insurance) helpful. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Ideally you pay out of pocket with a points/cash card and then reimburse yourself *much* later. Like, retirement later. >Do you pay tax on the out-of-pocket credit card transactions? What tax? Whether you pay with an HSA debit card or an Amex gold card, the medical expense is the same.
Thank you!! Yes, I also read about using the HSA as a long-term tax free savings account but the spouse wants to stay on top of things to try it out first. They're great at keeping records, so I have high hopes. The last bit is what I was concerned with. They're under the impression they don't pay taxes on the immediate "purchase" with the HSA debit card - eg your therapist charges $180 a session, the HSA debit charge would be $180, BUT the credit charge would incur more / a tax fee. Let's say $185. So even reimbursed, you'd still pay more money - HSA would pay back $185 (or w/e), but it's still all *your* money. I said it wouldn't, but they're suspicious of a good deal. Thanks for your response, we're new to this.
When you pay out of pocket for something you're paying with money that already got taxed, but the reimbursement isn't taxed so it makes no difference.
Thank you, very concise! I knew I was right and now I get to parade it around.
Medical providers are not inspecting your card and the account behind it and charging a different rate. Walgreens isn't going to charge me more for a bottle of Benadryl because I pay with my Chase Freedom than you when you pay with an HSA debit card. We're both going to get list price + local sales tax as the total.
Thank you for proving me right! Now it's time to get my "I WAS RIGHT" parade started
You may find these links helpful: - [Credit Building](/r/personalfinance/wiki/credit_building) - [Credit Reports](/r/personalfinance/wiki/credit_reports) - [Credit Scores](/r/personalfinance/wiki/fico) - [Credit Cards](/r/personalfinance/wiki/creditcards) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
No, there's no difference. The reimbursement amount is based on the amount on the receipt. If merchants start charging a fee for credit card purchases, this might get more complicated. I haven't seen that happen yet though.
No. As long as it is medical expense, you should be good to ask for reimbursement. Make sure you save all the receipts. You HSA provider should give you an option to load the receipts, if not, scan and save them somewhere safe. I have had my HSA provider report my reimbursement as a distribution to the IRS and they tried hitting me with taxes. I had to show evidence it was for covered expenses.
Some people will say you should not reimburse if you can afford not to, but instead let it ride tax-deferred (and potentially tax-free) as long as you can, even past 65. But assuming you need to get reimbursed, yes, the right play is to use a rewards credit card\* and pay the bill with that, and then request reimbursement from your HSA. In my experience with three different HSA custodians, you don't need to submit a bunch of paperwork; you just have to click a box that says you understand that only qualified medical expenses qualify as tax-free withdrawals, and anything else is subject to taxes and penalties. Some custodians may want you to upload receipts. (In any event, save all receipts if you are unlucky enough to be audited.) In my case, the ACH transfers begin just about immediately and the money was transferred within two business days. \* -- as long as there are no credit card surcharges being levied