Easiest way to take advantage of HSA/FSA plans for routine expenses

Submitted by LiveToSee22 t3_yea1a0 in personalfinance

We're a family of 5 with a good chunk of money going towards things that would qualify as FSA/HSA. We haven't had a plan in the past because I figured that all the reimbursement hassle wasn't worth it. However, I feel like I've seen products now that are FSA/HSA "credit cards" where you can just use them for your FSA/HSA purchases to keep things more simple. Is that true and would this be the lowest maintenance way to take advantage of these programs or are there other "hacks" that I'm missing.

Would love to save the money but at same time, time is money too so trying to figure out a way to do this that doesn't require a lot of overhead.

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Terrible_Sense_3043 t1_itwukoe wrote

If possible you would max our your HSA every year and do NOT use it until you retire. Once you hit a certain balance most plans will let you invest most of the balance. It is a great way to grow your money with no federal, state, or ssi tax at any time.

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apollosmith t1_itwv1ql wrote

This is the best answer. The real power of the HSA is not using it until retirement to take full advantage of the tax benefits.

The HSA expenses can be reimbursed at any time (even decades in the future), so OP could just track expenses, keep receipts, and do an annual (or whatever) withdrawal from the HSA.

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LiveToSee22 OP t1_itwv4zw wrote

Thanks. I'm checking on this right now but it appears that might not have a high deductible health plan. So it seems like FSA would be the path we would have to go. Not sure if that changes the advice at all.

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ICUpikachu t1_itwvvtv wrote

FSA is far riskier, can’t be carried over in full from year to year to grow. It’s truly “use it or lose it”

You really need to know how much you’ll be spending each year.

Honestly to me, I wouldn’t even bother. I worked for a FSA custodian and the pain in the butt it is to get the receipts in that you need to fulfill the requirements can be a headache and time sink.

If you got laid off mid year but never used the funds and never saw a doctor yet? All that money just POOF lost.

Some companies let you roll over like $550 into the next plan year perpetually, even then if you never use it and get laid off or quit it goes POOF.

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wilder_hearted t1_itwy65s wrote

We have an FSA card, and an app. Take a photo of the receipt and easy upload. Don’t need to supply receipts for pharmacy items.

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ICUpikachu t1_itx1hho wrote

It’s possible being the call center I only saw the people that had problems. In a perfect world it works that way. My company had an app too. The times people would upload blurry or non itemized receipts then need to get new ones or an EOB is SO many.

Our app also has a 4 receipt limit. If you hit that limit? You had to fax in the receipt like it’s 1980.

And my goodness you try telling a man that didn’t bother looking into how these accounts work that he just forfeited $2750 because he didn’t use the money all year.

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shadow_chance t1_itx19xo wrote

FSA/HSA cards are the most hassle free way, although you may still be required to produce a receipt in some circumstances.

FSA is use it or lose it, so there's a risk of losing money if you don't incur enough expenses.

Even with an FSA, it's technically better to use your own credit card for rewards, then reimburse yourself.

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[deleted] t1_itwv4uh wrote

Whether your FSA and HSA have a payment card that you can use is a function of the HSA account/FSA plan and may not be something you have control over. The "overhead" of getting a receipt and submitting it for reimbursement is minimal, I'd guess that most of the time, even with a relatively cumbersome paper process, you'd spend less than 20 minutes. Every now and again, there might be a problem of some sort requiring more of your time to resolve.

You'd have to value your time pretty highly to not want to save 7.65% up to ~40% on your medical expenses thanks to using dollars not subject to payroll and income tax. If you know you will have eligible expenses, use your FSA. Also max out your HSA if you can, because that money is yours to keep forever - worst case scenario is you make it to retirement with it and can withdraw it then.

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LiveToSee22 OP t1_itww2sj wrote

Example today. I got to the store and I buy some Claritin along with my normal stuff. Notice that Claritin is FSA/HSA qualified. Would I get a receipt for the ~$20 or so in spend and file reimbursement to save maybe $7 (we're in a state with no income tax so it's only federal)? Probably not...

For the big expenses I get but frankly I think it's a lot of little expense like this adding up and so that's why I'm looking for an easier way to spend this money if I go this direction.

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[deleted] t1_itwxw8e wrote

For an FSA the process is what your employer-provided plan says it is. If your HSA is employer-provided, same deal. I think you've probably spent more time worrying about wasting your time than actual time it would take to submit that $7 reimbursement, but, you have to decide how to value your time.

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Rave-Unicorn-Votive t1_itwxciv wrote

If your health plan isn't a HDHP and your employer doesn't offer an FSA then the whole thing is moot. Neither of these accounts are things you can just choose to open on your own.

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_lmmk_ t1_itwwero wrote

My HSA card is the exact same as a debit card. There’s no extra paperwork unless I buy something on Amazon, for instance, instead of at my pharmacy.

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LiveToSee22 OP t1_itwwusi wrote

Curious...why the extra paperwork for buying something at Amazon? Is it because there isn't the visibility into what was actually purchased there vs. the pharmacy providing that detail somehow?

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_lmmk_ t1_itwxg0w wrote

Yeah. So last year I tore my ACL and bought a cool therapy medical device. The device itself is something I can pay for with my HSA, but it was like $250 cheaper to get it on Amazon than through Kaiser. I tried using my HSA card but it wouldn’t go through on Amazon, so I paid out of pocket.

My extra paperwork was super easy - I just downloaded the Amazon receipt, uploaded it to my HSA website, and like 2 months later I was reimbursed out of the HSA for my out of pocket cost.

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ICUpikachu t1_itwxpkp wrote

You’re spot on. It depends on the merchants system if it tells the custodian if the item is qualified or not.

At least that’s how we explained it in the call center

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