“What happens if I don’t spend my entire HSA balance before the end of the year?”

One of the great benefits of Health Savings Accounts (HSAs) is that you will never lose the money in your account, even if you are unable to spend the funds by the end of the year. Since an HSA is a bank account in your name, the money will always be available to you and will continue to roll over from year to year.

Unlike other medical savings accounts, such as Flexible Spending Arrangements (FSAs), you don’t have to worry about trying to plan ahead and guess what your medical expenses will be for the upcoming year. You can change your payroll deduction amount for your HSA as frequently as you like, which makes it customizable and easy to adjust to the actual amount of your medical expenses during the year.

In fact, many HSA account holders maximize their contributions to ensure that they achieve the greatest tax savings while saving for future health care expenses. You can pay for any eligible expenses the following year, even if you are no longer on a High Deductible Health Plan (HDHP). This lets you earn interest or invest your HSA balance to increase your balance. Along the same lines, if you are interested to learn what happens to your HSA when you leave your employer, you can view this blog post.

To see answers for other HSA-related questions, check out our Health Savings Account (HSA) Expert Blog Series. If you have any questions, please feel free to contact our support team by phone at (866) 384-8549 or by email at support@tangohealth.com.

“Do I have to reimburse myself from my HSA within a certain time period of incurring the medical expense?”

There is no deadline for reimbursements from your Health Savings Account (HSA) for qualified medical expenses. You have your entire lifetime to reimburse yourself. See IRS Notice 2004-50 Q.39 for the official explanation from the IRS.

Tango’s patented flex reserve automatically keeps track of qualifying medical expenses so you’ll know how much you can reimburse yourself.

Many people find that this is a great way to save for future expenses or to grow your balance with interest or investments. If you’re interested in investing your HSA funds or earning interest, contact the HSA custodian or trustee at which your HSA is held to see their options.

There are just a couple things to keep in mind however, when you are planning to reimburse yourself at a later date:

• Your HSA must be established at the time the expense was incurred. So,  if you did not open your HSA until March of 2013,  you cannot reimburse yourself for an expense that you incurred in October of 2012.

• You must have proof that the amount you are requesting the reimbursement for was an eligible medical expense and that it was not otherwise reimbursed nor taken as an itemized deduction for a prior tax year. See our blog post on receipt keeping for more guidance on this rule.

To see answers for other HSA-related questions, check out our Health Savings Account (HSA) Expert Blog Series. If you have any questions, please feel free to contact our support team by phone at (866) 384-8549 or by email at support@tangohealth.com.

Now that we’ve made it clear you must have a receipt (and we mean must), what are the details of record keeping? The IRS has not issued an official notice regarding record keeping with an HSA besides this:

“You must keep records sufficient to show that:

• The distributions were exclusively to pay or reimburse qualified medical expenses,
• The qualified medical expenses had not been previously paid or reimbursed from another source, and
• The medical expenses had not been taken as an itemized deduction in any year.

Do not send these records with your tax return. Keep them with your tax records.”

With that said, there are some general rules about what is required of a receipt that supports a tax deduction.

Rules On What The Receipt Must Contain:

Rules On How Long To Maintain The Receipt:

Generally, it’s a good idea to hold on to your receipts for tax purposes. If you are storing them electronically, there is no reason really to get rid of them. To be more specific though, these are the IRS rules on how long records must be kept:

Are Electronic Records Sufficient For HSA Distributions?

The short answer is yes and the specific text on this is derived from the general rules about record keeping for taxes. Again, the IRS has not issued specific rules on Health Savings Account electronic record keeping but if you want to read their jargon for keeping electronic records you can go here.

HSA Receipt Summary: It’s really important that you keep receipts for amounts you spend on eligible medical expenses. Overall, the IRS considers spending from an HSA to be equivalent to a tax deduction and has not provided guidelines beyond the general rules given for all tax deductions. If you want to avoid pain with an IRS audit, follow the above guidelines.

“What happens to my HSA if I leave my employer or retire?”

Here’s our answer: First, the money in your Health Savings Account (HSA) is yours to keep. You can continue to use it for qualified health expenses, and your account will remain open until you choose to close it.

If you remain enrolled in a high deductible health plan (HDHP), either through a new employer, through your former employer’s plan via COBRA, or through an individually-purchased insurance policy, then you will still be eligible to contribute to your HSA. However, if you have no coverage, or if you enroll in a health plan with a low deductible, then you will no longer be eligible to contribute to your HSA.

Lastly, you should note that most employers cover the monthly or annual cost of their employees’ HSAs. You should check with your HSA provider to determine whether you will start to be charged any fees once you are no longer associated with your former employer.

To see answers for other HSA-related questions that we’ve answered on our blog, check out our Health Savings Account (HSA) Expert Blog Series. If you have any questions, please feel free to contact our support team by phone at (866) 384-8549 or by email at support@tangohealth.com.

1. Take a picture of your receipt at the time of purchase

With a tax-advantaged account, like a Health Savings Account (HSA) or Flexible Spending Account (FSA), you need the receipt as evidence no matter how you paid for it. Before jamming it into your pocket, wallet, or purse, use your SmartPhone to take a picture of it and memorialize it forever.

Tango users can now add the receipt right into their Health Spending Journal while standing at the pharmacy counter using our new mobile friendly interface. If you used personal funds for the transaction, you’ve got immediate proof of the qualified expense and can make a reimbursement from your HSA or FSA easily.

2. Find out your local urgent care facility locations, costs, and hours now

I can speak from personal experience that researching local urgent care facilities is extremely important and will save you a lot of money in a minor emergency. I know this because I accidentally cut my hand with a knife on a Friday evening while cooking. It was obvious I’d need stitches and I remembered there was an urgent care facility up the road from my house. I’d seen others, but couldn’t remember if they were in my insurance network or not.

With an emergency, you don’t wait – you just go. As we pulled into the parking lot it was clear from the lack of cars and lights that the facility was closed. A half-mile back we had passed a hospital and decided to just go there rather than circle the city looking for an open urgent care facility. (Plus, I was tired of putting pressure on my hand.)

As I walked in, the first question I asked was whether the hospital took my insurance. They did – but the doctor for the evening did not. At the end of the day, my three stitches cost me $700 in-network hospital fees and $600 out-of-network doctor fees: over $1,300! Thank goodness I had money in my HSA to cover that.

While writing this blog, I decided to reach out to an urgent care clinic in my insurer’s network. One was Texas MedClinic, who talked to me about the services they provide to employees, especially those on High Deductible Health Plans (HDHPs). “We really encourage people to learn more about urgent care clinics. It’s not just a convenience thing; there is a huge cost component.”  explained Robin Schuler, Marketing Coordinator for Texas MedClinic.

Here are some great tips she provided:

• The average hospital emergency room visit costs $1,500 (makes sense based on my visit) while the average Texas MedClinic visit costs under $200.

• All of their services are billed centrally, meaning all doctors and staff would be in-network if your insurance applies at their location.

• Some of their locations are now open 24 hours; the one in my area is open until 11 p.m. every night of the week.

• Online booking has become popular to “reserve a place in line” for non-emergency items such as the flu. Their goal is to service everyone in under one hour.

• The PPACA, aka healthcare reform, has a provision that distinctly outlines what is emergency care and thus covered by insurance as in-network. If my wound would have been considered an emergency, then my out-of-network doctor would have been considered in-network. I could debate whether a deep cut that refused to stop bleeding is an “emergency” but that’s for another post.

3. Maximize the free wellness exam

Everyone should know that their annual physical exam is covered at 100% by their insurance company. Make the most of this free visit:

• Most of your vaccinations will be covered 100% so request them during the visit to avoid a future office call.

• If you regularly take Over The Counter medications for a medical condition, such as allergies, ask your doctor to write you all the appropriate prescriptions so they become qualified expenses for your HSA or FSA.

• Take the time to review your current prescriptions with your doctor, especially the more expensive ones. There may be an alternative that is just as effective but at a lower, generic price. If you decide to try a new one, ask for samples first to avoid paying for a prescription that you later decide not to fully use.

4. Remind your doctor that you are on a HDHP, especially if taking a controlled medication

I know several doctors personally and am always surprised when they ask questions about High Deductible Health Plans. The codes they check on your chart could mean the difference between a low or high cost visit. While mistakes can happen, it’s essential that you are billed and pay for the right type of visit.

Some states have laws, while other doctor’s have their own requirements, to see patients before refilling certain controlled prescriptions. While it is a worthy cause to avoid diversion of controlled substances, each of these visits cost money if not tied to your annual wellness exam. Make sure you are clear when booking your appointment that you are only visiting for a prescription check-up, notify the nurse when you see them, as well as the doctor. Ask how much the visit will cost to ensure they only charge you the necessary amount.

Taxes and FSAs

Filings taxes with a FSA is easy. There’s nothing to worry about. You don’t need to do any extra forms or anything. This is because the account is not truly a personal account; it is an account your employer owns with funds designated for your use. An FSA works like this:

1. You agree to a salary reduction with your employer with the understanding that they will use the funds to pay for your qualified medical expenses. These funds allow you to pay for those expenses without having to have income tax or payroll tax deducted before you use the money.
2. The payment of the medical expenses is managed by an FSA administrator. This administrator and your employer are ultimately responsible for preventing the use of funds for anything but eligible medical expenses.
3. If you elected to make FSA contributions through payroll deductions (in addition to any contributions made by your employer)  your W-2 will reflect the lower taxable income resulting in you having to pay less income tax.

Since the account is not really yours, it’s not necessary to mention it on your personal income tax return. Of course, this means that that once you make your FSA contributions, the money is not yours to keep if you don’t spend it, and therefore you lose the funds that you don’t spend by the end of the year.

Taxes and HSAs

HSAs require an additional form to be filed with your personal income tax return. This form is extremely easy and straightforward to fill out. We have an outline of the requirements here and previous blog series with more details. We strongly suggest you read part one, part two, part three, part four and part five.

The overview goes like this:

1. You will receive your W-2 which will show any pre-tax contributions in box 12
2. You will need to fill out Form 8889
3. The important parts of the form are indicating your pre-tax contributions, your post-tax contributions, any distribution that was rolled over and any spending on non-eligible medical expenses
4. Include the form with your return

You will receive two documents from the bank that are not required to complete the form, 1099-sa and 5498-sa. The former is usually mailed in February (depending on the custodian) and the latter is usually mailed in May. The 1099 indicates all the distributions you had from your HSA and the 5498 indicates your contributions to the HSA. You may need some of this information to complete the 8889, but you should be able to find the same information on your bank website or your W-2.

Austin, TX, March 12, 2013 –Tango Health®, the premier provider of Health Savings Account (HSA) management software and services, today announced the launch of Tango 2.0 that delivers health savings account management on mobile devices.  Tango 2.0 leverages responsive design to deliver the industry’s most feature rich HSA management solution to largest breadth of mobile devices.

“We heard from customers that deploying a limited featured HSA management app through app stores wouldn’t deliver on their employees’ requirements,” said Duncan Van Dusen, Co-Founder and CEO of Tango Health. “Therefore, we made sure that our mobile strategy was focused on delivering the full Tango experience on mobile devices in order to continue to lead the industry in driving adoption of high deductible health plans and health savings accounts.”

Tango 2.0 delivers its HSA management experience on iOS, Android and Windows devices and fulfills the demand from Generation X, Generation Y and Millennial users that rely on mobile platforms as their preferred computing platform.  New features include the ability to take a picture of a receipt with a mobile device and upload it directly into your Tango HSA Vault™ as well as the ability to upload expenses from other sources.

In addition, Tango announced the issuance of a key patent covering core aspects of Tango’s HSA platform.  The patent covers Tango’s innovative features, including, the Health Spending Journal, the Flex Reserve®, automated reimbursement, and the ability to automatically maintain a target balance in your HSA.“We continue to focus on delivering innovation that solves employers’ problems deploying, managing and optimizing health savings accounts,” said Todd Praisner, Co-Founder and President of Tango Health. “This patent is a testament to our focus on innovation. We believe that our growing IP assets strengthen our leadership position in HSA administration.”

About Tango Health

Tango Health helps reduce the total cost of health benefits for employers and employees by driving adoption of HDHP+HSA, eliminating the HSA administrative burden and maximizing the tax savings.  Employers that are focused on containing or reducing their health care costs and reducing the uncertainty of the Affordable Care Act have come to rely on Tango because its industry leading management software and services.To find out more about Tango HSA, visit www.tangohealth.com or call 855-468-2646.

Contact:
Jeff Fugitt
VP, Marketing
Tango Health
v. 512.653.8295
e. jfugitt@tangohealth.com