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My employer changed HSA providers in June 2016. We were HSA eligible since 2014 and the original account was established then.
My wife had surgery April 2016 yet I was using funds from the June 16 HSA to pay it off once I funded it. I did not roll over the previous account. Both are still open. Should I deposit a small amount into the original account and then roll it over to the 2nd HSA to get the correct established date? Or is it necessary to truly roll it over as long as you have multiple accounts?

  • HSA usage is somewhat on the honor system. Did you have sufficient funds in the account opened before the surgery to pay, or were you really using money that had not yet been deposited? – chepner Nov 29 '18 at 20:35
  • There were not sufficient funds in the old account at the time. I have read that it doesn't matter when the funds are deposited as long as the account is established prior to the event. (Hopefully I read that correctly) hsabank.com/hsabank/learning-center/… – Terry Lane Nov 29 '18 at 21:12
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Here is what the IRS has to say about it in Publication 969:

For HSA purposes, expenses incurred before you establish your HSA aren’t qualified medical expenses. State law determines when an HSA is established. An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established.

As you can see, the IRS does allow for HSAs that were funded by a prior HSA to use the older date. It doesn't explicitly say that if you have two HSAs but did not rollover any funds whether or not you can use the old date while taking a distribution of funds from the new HSA.

My unofficial opinion is that as long as you had an HSA in place before your wife's surgery (you did), the IRS probably doesn't care which HSA the money comes out of.

However, the HSA provider might give you a hard time about it, if they require you to submit receipts. If your HSA provider does not require any documentation (mine doesn't), then this is not a concern for your provider.

If you are worried about there being a problem in an audit, you could rollover money from the old HSA into the new. I'd do this anyway so that I don't have to deal with multiple accounts, but if you want to keep separate accounts, you could ask if they will allow you to transfer a small amount of money from the old to the new, allowing you to use the old date in good conscience.

  • Thank you. Do you have documentation that it does not require being rolled over as long as one was established? When I read IRS rules it states the established date goes with the old accounts for rolled over situations. I have had a HSA for 5-6 years and will be going to a new (3rd) one in 2019. If I don't truly have to roll it over it would be nice. – Terry Lane Nov 29 '18 at 19:13
  • @TerryLane I have expanded my answer. – Ben Miller - Reinstate Monica Nov 29 '18 at 19:45
  • Thank you. It is kind of a unique situation and I appreciate your answer. Just to be save I might transfer $25 or something. We have maxed out HSA contributions every year for 4-5 years. – Terry Lane Nov 29 '18 at 20:34
  • @BenMiller It could matter if the surgery cost, say, $5000 and there was only $4000 in the old account. Only some of the money used could have, in theory, come out of the old account. Personally, I just make sure to pay everything from my older account, although I don't have any other compelling reason to use one account over the other. – chepner Nov 29 '18 at 20:37
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    That is the case. The old account had a few hundred while the 2nd account had a few thousand. Total costs were around $12k paid over 2 years. I guess rolling it over will likely cover my bases. – Terry Lane Nov 29 '18 at 21:11
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As it does not matter which HSA you use for payment or how many you have, I would just keep one original statement from the oldest account (preferably the oldest statement).

Documentation of you having an HSA will also be in previous year's tax declarations (as your contributions were tax-free and therefore were listed), so the IRS will probably not doubt you anyway; and in case of an audit, one old original statement will be proof enough that the HSA existed.

  • (same comment as above) Thank you. Do you have documentation that it does not require being rolled over as long as one was established? When I read IRS rules it states the established date goes with the old accounts for rolled over situations. I have had a HSA for 5-6 years and will be going to a new (3rd) one in 2019. If I don't truly have to roll it over it would be nice. – Terry Lane Nov 29 '18 at 19:13

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