If you participate in the High Deductible Health Plan (HDHP) with a Health Savings Account (HSA), this message is very important: keep receipts of your Health Savings Account (HSA) spending – this is an IRS requirement. Essentially, any money that comes out of your HSA and is coded as a distribution by your HSA institution must have a receipt showing the distribution was an eligible medical expense. The only exception is when a distribution is rolled over to another HSA and you must account for this on your tax return.
Here’s what the IRS says regarding record keeping with an HSA:
“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.”
Keep these receipts like any other tax deduction receipts. Be sure to keep you Explanation of Benefits from Priority Health or ASR as well, because they prove that the expense was not paid by our insurance. You can keep electronic records if you treat them like any other IRS electronic records – read the IRS language for keeping electronic records here.
To read the full article published by TANGO, visit Health Savings Account Record Keeping: Receipts and HSAs. If you have questions about this or other benefits, contact HR at 995-1362 or 995-1350.