In the United States, one must keep records of all one's medical expenses processed through one's HSA in case of an IRA audit. What should a medical receipt contain to be IRS-approved? I'm assuming it should contain the patient's name, the paid amount, the date of the expense, the name of the medical provider and some description of the provided services. Is anything else necessary? E.g., should the billing codes for the procedures provided be always mentioned on the receipt?
Ideally you would keep both the bill and payment receipt, so you can prove that those payments were for eligible expenses. Practically though, I believe a payment receipt by itself that shows a medical office or hospital as the payee should suffice. (Note IMHO the bill by itself without a payment receipt may not suffice.)
The IRS does dictate recordkeeping requirements, but unfortunately doesn't specify the details of "how", as seen in Pub 969, page 9, which states:
Recordkeeping. You must keep records sufficient to show that:
- The distributions were exclusively to pay or reimburse qualified medical expenses,
- The qualified medical expenses hadn’t been previously paid or reimbursed from another source, and
- The medical expenses hadn’t been taken as an itemized deduction in any year.
Don’t send these records with your tax return. Keep them with your tax records.
I find the records that must be kept to be very simple.
I get the Explanation of Benefits (EOB) statement from the insurance company. This has the benefit of including the medical procedure code, and the amount that I was responsible for.
If my part is a copay then I generally use the HSA debit card at the providers office to make the payment. That shows up in the records of the HSA account, which I then match against the EOB.
If what I owe is not a copay, I wait for the insurance company to generate the EOB and then use the "pay my provider" option at the HSA website. This option doesn't require me to send the EOB from the insurance company to the HSA. If I use the "pay me back" function I have to upload the EOB to the HSA website.
I have not used the HSA to pay anything else that wouldn't have this electronic paper trail. I have not used it to pay for something that wouldn't be either partially covered by insurance, or count towards a deductible or out of pocket limit.
I have found that the EOB and the statements from the HSA website to be able to document the medical necessity, the net amount I am responsible for, and the amount I am pulling from the HSA