HSA Reimbursement

What is HSA Reimbursement?

HSA reimbursement is the process of disbursing money from a health savings account (HSA) to pay oneself back for medical expenses made out-of-pocket—usually because the total expense exceeds the amount in the account at the time.

Like other tax-advantaged accounts, HSAs have annual contribution limits. Because of this, it’s not uncommon to have a medical bill larger than the sum in your HSA at a given time. But with HSA reimbursements, you can take advantage of the tax-exempt status of the account when the balance is higher.

HSA Meaning: What Does HSA Stand For?

HSA stands for health savings account. This is a kind of tax-advantaged account employees in the US can use to cover qualifying medical expenses.

An HSA is tied to a high-deductible health plan (HDHP), but the money rolls over year-to-year and employees are allowed to invest it, meaning they can make use of their pre-tax contributions and interest earned. There are a few ways to use an HSA:

• HSA card or check linked to the account
• Online bill pay via the account administrator
• Self-reimbursement (HSA reimbursement)

HSA withdrawal rules provide a safety net for unexpected medical bills. Over 70 million Americans have an HSA, so they can use HSA reimbursement when necessary. As an HR professional, it’s important to understand what HSA reimbursement involves and how it works to help your employees make the most of their benefits.

How Does HSA Reimbursement Work?

Here, we’ve broken down a detailed example of how to get reimbursed from HSA to help better understand it in practice.

How Can HSA Reimbursement Help with Medical Costs?

HSA withdrawal rules allow individuals with an HSA to recoup tax benefits from out-of-pocket medical expenses. It’s is an effective way to leverage the tax advantage of a health savings account for medical expenses, even when there isn’t enough money in the account itself when bills are due.

How Long Do HSA Reimbursements Typically Take?

The exact length of time that HSA reimbursements take may vary depending on the provider. It’s important to keep in mind that there must be sufficient funds available in the HSA to reimburse your expenses, so it can take some time.