How to handle medical costs above maximum HSA contribution

Question

I'm starting a brand new HDHP and HSA this year, and I want to make sure I understand how it works...

My deductible and out-of-pocket are $13,100 (family) with insurance, and I also plan on spending money that is not covered by insurance at all.

The 2018 limit for HSA contribution is $6,900.

Assuming I fully fund the $6,900 to the HSA account, but spend more than $6,900 in medical expenses this year, what do I do? I've read that say I can pay with my own money then reimburse myself later, but does that apply over multiple years?

For example, suppose I spend $8,000 in 2018. Would I:

1. Spend $1,100 of my personal money and claim that as a deduction on my 2018 income tax (if it's above the 10% threshold)?

2. Spend $1,100 of my personal money, ignore it for income tax purposes in 2018, then sometime in 2019 transfer $1,100 from HSA back to my personal account?

EDIT As a followup to that, suppose in 2019 I don't have an HSA (like if I get a job with super-awesome low deductible insurance and have to give up the HSA account). What happens to that $1,100? Do I just lose any potential tax benefit for it?

Answer 1

Yes, you may use HSA funds for expenses incurred any time after the HSA was opened. When the contribution was made and what the tax year is does not matter. You cannot reimburse yourself for expenses that were incurred before you opened your HSA account.

Regarding your additional question in the edit, you don't have to give up your HSA if you get a health plan that is not a HSA qualified HDHP, you just can't make any contributions to the HSA while you don't have such a health plan. You can still use the funds as well.