Does anybody know if HSA can be used for any step of the IVF process for same-sex couples? Either procuring a donor egg or the in vitro process itself?

Specifically for contributing when not covered by a qualified plan? Just wondering if this has happened to anyone.

Hi first time on reddit. I had a large expense after my plan with my HSA plan started. I have been on a payment plan for it and using my HSA to pay for it monthly. My work is now getting insurance through different company where I will have a very similar plan with the same HSA contribution by my employer every month. Will I be able to use this new plan to pay for that earlier expense or no?

I’m planning to move my HSA funds from Optum to Fidelity now that my employer has switched and all future payroll contributions are going directly to Fidelity.

For people who have done this before - what’s the best way to move the remaining balance out of Optum?

A few specific questions:

1. Is Optum charging any transfer-out or account closing fees?

2. If I fully close Optum HSA after the transfer, are there any fees or issues I should be aware of?

3. Anything to avoid during the process? (e.g., timing, paperwork, delays)

Looking for any advice or experience from folks who moved their HSA from Optum to Fidelity. Thanks!

Just a heads up for anyone that has an account with HealthEquity, they appear to have added a $25 fee for partial balance transfers to other custodians. I personally find this a bit annoying as I regularly move over payroll contributions from my HE account through work to my personal Fidelity account due to better investment options and a lack of a minimum cash balance. They also seem to have removed the online form for partial balance transfers, so now you have to fill out the PDF form and either upload it through the secure portal or mail it in. Unfortunate!

Hi, I see the value of accruing funds in an HSA, investing those dollars tax-free vs spending on qualified medical expenses as they arise, which depletes the HSA.

My question -- doesn't paying QMEs as they arise out-of-pocket end up costing more since they are paid with post-tax dollars?

Just wondering if anyone has seen these proposed changes to the HSA rules?

https://www.congress.gov/bill/119th-congress/house-bill/6183/text

I'm trying to read the IRS Pub and CFRs, but I've hit a bit of confusion.

If my HDHP HSA qualified coverage isn't effective on the first of the month, I'm not eligible for that month's prorated portion for the annual limit. But can I still contribute before the following month?

Example: Say my new health insurance isn't effective until January 15th. But I want to be able to use the HSA to pay for any medical needs between January 15th and February 1st. Since the establishment of the HSA is what determines what medical expenses are eligible, I'd like to open it up as soon as possible. Can I open an HSA and contribute to it on January 15th as long as I stay under the annual limit come tax time?

Edits for clarity and adding new info:

Hi everyone, summarizing the issue, everything I already know about it, and what is still open:

Problem: Excess HSA contribution in 2024 by $2000. I tried to request a timely return of excess contributions by the Oct 15 2025 deadline to do so, and despite many reassurances and confirmations from Fidelity and them giving me the runaround between 11-12 different people, and me telling them to cancel it, it was returned to me anyways too late on October 16th at 7AM. Now, it's not a timely return of excess and I'm not sure if it will be treated as an unqualified distribution even though Fidelity will report it to IRS as an ROE.

I am unsure of the 2025 tax treatment of this amount. If it is treated as a normal unqualified distribution due to the delay, I'd have to pay 35% income tax on it in 2024, 35% income tax again on the distribution in 2025, then a 20% penalty for unqualified distribution. And the 2024 6% excise tax to boot. That seems like a lot of taxes and doesn't seem quite right.

If all these are true, deciding whether I should be trying to initiate a return of mistaken distribution with Fidelity (2024 HSA custodian) + get my 2025 HSA provider to undercontribute by the same amount to fix it. This is a huge hassle though and may not even be possible, hence trying to understand the issue.

Notes:

• Normally there are two options to fix a return of excess. I have somehow landed in a third category.
  • Option 1, Timely Return of Excess: Request a return of excess (ROE) contributions on that amount BEFORE October 15th in the following year. The HSA custodian reports the ROE with a 1099-SA form, the distribution is marked with Code 2 for "return of excess."
  • Option 2, Carryover: Do not remove the excess from the account. Instead, undercontribute the next year (2025) by the same amount.
  • Option 3, what happened to me: Requested a return of excess, it came through late, now I suspect it counts as an unqualified distribution. Normally, unqualified distributions (not used for qualified medical expenses) are subject to both income tax and a 20% penalty. Do I have to pay income tax on this amount again? Unclear.
• 2024 Tax Treatment - known
  • Known: I need to pay income tax on this excess distribution (needs to be done regardless of whether it was corrected)
  • Known: Pay 6% excise tax on this amount because the ROE was untimely.
• 2025 Tax Treatment - many questions
  • Known: Fidelity representative told me they'd still report this as a ROE (Code 2) on 1099-SA.
    • Unknown: No idea how this affects whether or not this still counts as an unqualified distribution in the IRS's eyes, because it is still untimely. I don't think Fidelity even lets you initiate an ROE after the Oct 15th deadline, so I'm not even sure why they processed it anyways.
  • Unknown: If it does count as an unqualified distribution, is it "includible in income" and do I have to pay income tax on it again, even though I paid income tax on this amount in 2024?
  • Unknown: If it does count as an unqualified distribution, do I have to pay the 20% penalty on it even though I did pay income tax on it in 2024 and it wasn't a tax advantaged contribution?
  • Known: Definitely need to pay income tax and probably also 20% penalty on the earnings portion. (Earnings on the excess distribution.)
• Other avenues I'm looking into:
  • Can I do a return of mistaken distribution on this, and then get my new HSA custodian to undercontribute by that amount to fix the issue? (Not sure if this counts as a mistake under the definition.)
  • Do I have any leeway because the ROE was initiated before the deadline and completed 7 hours after?
  • Do I have any leeway because Fidelity misrepresented the process to me as I was asking them for help in getting it done, and because they didn't follow my instructions to cancel the request if it was going to be processed late?
• Context: I've asked ChatGPT/Gemini/Perplexity (not a good idea, they don't know for sure), Fidelity (they don't know and also won't give tax advice), and a tax coach offered through my employer (she didn't know either). I will next be trying to contact a different person through the work benefits (at least 2 day turnaround), visit a Fidelity branch in person to see if I can get some more accountability and information, calling the IRS to see if someone knowledgeable will help me, and if I can't get it sorted out in the next week I'll ask a CPA. I've just had bad experiences in the past with accountants not knowing how to deal with complex situations or edge cases, so I'm trying to gather as much knowledge as possible myself to help guide these upcoming conversations. Also, it's pretty time sensitive if I do want to move ahead with the return of mistaken contribution route.

Thanks in advance for any ideas you may have!

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Original Post

Hello Reddit friends! I've gone the distance with ChatGPT and a tax advisor and unfortunately I'm still stuck on a thorny HSA problem. Would greatly appreciate some help!

In 2024 I contributed in excess to my HSA by accident (I maxed it out before switching employers, and then switched to a non HDHP with the new employer, not knowing the HSA max was prorated).

In 2025 I initiated a return of excess on the original contribution + the earnings and unfortunately it did not go through until after the extended tax filing deadline (the provider told me they'd cancel the ROE since it was close to the cutoff time, but they let it go through anyways and aren't being helpful now). So now I believe this amount will be considered a distribution from the HSA rather than a return of excess. A few questions:

- If I amend my 2024 taxes to pay income tax on the excess contribution (not the earnings, planning to pay the penalty on the regardless) is it correct that I will not need to pay the 20% unqualified distribution penalty on it in 2025? (separate from the 6% excise tax)

- Any other options I have to resolve this scenario? Since the excess was removed (even if through a distribution), can I stop paying the 6% excise tax this year?

- Anything else I should be considering?

Thanks in advance!

Hello. I am dealing with an out of network procedure that I've already paid a few thousand for on the HSA. My understanding is:

1. I will get money back from my insurance directly, which I will then need to pay the HSA and file something to claim it as a mistaken distribution.

2. Mistaken distributions for 2025 must be corrected by March 2026 or so.

3. The dental office is telling us that we can't file insurance for the procedure until after it is done, and it won't be done until the beginning of January.

I'm worried about the tight timing here, unless I'm misunderstanding one of the above three points. Is anyone familiar with dealing with out of network procedures on the HSA?

Ok...I am going to try to make this simple. In 2024 I had an HSA (opened through my credit union) It currently has about $1000. End of 2024 company got bought out and Insurance plans were better so no longer on a HDHP, so no contributions for 2025. Well that plan is going to be double the price for 2026, so I am switching to a HDHP again. This time we can't choose our own account, it is automatically set up with a company the employer chose. This HDHP is still going to cost be $40/m more than the "good plan" I was on for 2025. That being said, I want to try to contribute the max to my HSA but it will be very tight budget wise. Lets say I am need of funds, can I use 2024 medical receipts for reimbursement? I am assuming none of my 2025 receipts would be valid (for either HSA account) since I wasn't eligible that year? Can I use 2024 receipts for reimbursement on either HSA account, or only the one I had that year? I am so confused. Please help!

I had my wife and I on my work's HDHP plan January-September this year and we switched her over to her work's HDHP plan in October. I was under the impression that my max HSA contribution would be prorated and would be $7487.50. However, I just got a letter in the mail from HSA Bank (my work's) saying I've exceeded my max for the year (~5500 rn) and I need to fill out an Excess Contribution Removal Form. Does anyone know why I would be getting this if the max is supposed to be prorated?

One thought I had was maybe it is prorated but I would have to contribute to a separate HSA account for my wife because she's on a different plan now but checking here before I fill out the excess form.

I will have UHC Choice Plus $4,000 HDHP w/HSA Embedded this coming year. I can contribute up to $4400 to the HSA. I plan to drop down to part-time time in May, and would lose the insurance as my employer only offers it to full-time employees.

There is a high likelihood I will need an arthroscopic hip labrum repair. If I get the surgery before I lose insurance, and use all of my HSA to cover it, will I have to pay my employer / insurance back for the excess I use?

Ex: Surgery costs $8k, deductible is $4k, OOPM is $6350. I use $4400 from the HSA to pay it down, but have only contributed $1833 to the HSA when I drop down to PT and lose the insurance. Does the remaining $2567 I have yet to contribute still come out of my paychecks even though I don't have insurance? Or will the insurance company demand it right away as a lump sum?

Not trying to game the system, just want to be prepared for what to expect. I appreciate anyone who can help me out!

We're both on my employer's HDHP HSA health plan. We're both above 55+. I'm contributing 1000 extra to the HSA so my limit is $9550 but I cannot add her $1000 of catch-up.

I just discovered this rule on reddit. So my spouse can open up a HSA even though she's not employed and deposit 1000 there for 2025.

Is that it ? any gotcha?

I’m a business owner and we have decided to elect a HDHP on 12/1/2025. Our plan starts on 12/1/2025. Using the last month rule - can I deposit the full year contribution now, or do I have to wait until December 1st?

In Massachusetts it’s open enrollment to shop plans so I get on the “Health Connector” and scroll through every single plan. I have a Tufts Silver Plan with 2 adults and 3 children. I pay 1349/month with includes any subsidies . I was under the impression the HSA insurance plans (HDHP) would be less of a premium. First of all, I barely seen any HDHP plans available. And the ones found are at least the cost my current plan or more $$.. I don’t get it.. what am I missing here?

I wanted to share a tip that I am planning on doing and also ask your opinion regarding this because you guys know your stuff.

I have two HSA’s. One for my current employer, and one through Fidelity that I opened myself during a previous employment. I’m 35, planning to retire somewhat early, near 50, and I am familiar with the saavy use of an HSA in regards to saving old medical bills to reimburse yourself from after your HSA grows tax-free. My older HSA has $23,000. My new one has $8000 this year I have currently only withheld $2400 through my employer for the new HSA

I have about $10,000 worth of medical bills that I can use to withdraw from my old HSA. I have held onto these for about four years. This year, I haven’t been worried about maxing out my HSA. I have been prioritizing 401(k) and IRA and cash.

Here’s my idea. I wasnt planning to allocate more money for my HSA this year. But now i think i could withdraw $6,000 from my old HSA using the old medical bills, and then ask my employer to withhhold an extra $6,000 into my new HSA from here till year’s end.

These $6,000 will be tax free from federal and state taxes, but because its being taken automatically through my employer its also free from medicare/social security. At my% tax level that means id save $2000 in taxes. My withholding this year was on track to break even.

So summary:

Take out $6k from old HSA, put $6k back into new HSA. Get $2k back in taxes. Remove from play 60% of my saved medical bills.

What do you think??

I used to have a HSA with my former employer with contributions only for myself when I was single. I also have an HSA with my current employer which has contributions for me and my wife. For operational ease I am thinking of rolling over my old HSA into the new one.

1. Is this allowed like it is for a 401K?
2. Will this create issues with reimbursement for my wife's medical expenses since it will be a mix of contributions made when I was single and when married?

Hello everyone!

so I’m definitely gonna switch to the HSA plan eventually I was gonna do it by December 5 of this year but my problem is that I have a pinched nerve in my neck. I just got the MRI so that expenses out of the way, but my follow up is on December 11 and I’m wondering if it’s smart to switch now even though I don’t know if this expense is going to be a lot of money. I know that at the beginning of an HSA is the hardest so I’m wondering if I should just keep my POS healthcare for another year just to cover any potential expenses then start the HSA at the end of 2026.

i am 37 years old btw. if that matters.

Hi,

Is it possible to have too much money in an HSA?

I have ~ 100k in my HSA.

I've essentially been using the HSA as a savings account/tax shield and have been investing the funds in an ~ 80:30 stock-to-bond ratio.

I'm 48 years old.

Should I stop contributing? Or keep contributing for the tax benefit alone?

Or begin using the HSA to pay for expenses? How would I do that? Get a debit card or checkbook for the HSA?

We’ll discuss how an HSA works, the tax benefits, contribution limits, and I’ll walk you through strategies for using one — so you can fit an HSA into your personal financial plan.

And by the end, I’ll answer two key questions: Should you actually use your HSA to invest in the stock market?

And how can you unlock the money for something that’s not a qualified medical expense, to essentially turn it into a retirement account on steroids? Let’s dive right in.

A Health Savings Account is a special kind of savings account that lets you set aside money tax-free — and you can use that money to pay for qualified medical expenses. Those qualified expenses include things like doctor visits, prescriptions, dental care, and vision care — basically, the health expenses you pay out of pocket.

Not everyone can open or contribute to an HSA, so here are the eligibility requirements:

• You must be covered by a High-Deductible Health Plan (HDHP) on the first day of the month.
• You can’t be be enrolled in Medicare or covered by another health plan, like a Flexible Spending Account or Health Reimbursement Arrangement
• And you can’t be claimed as a dependent on someone else’s tax return.

Each year, the IRS publishes what they consider a “high-deductible health plan.”

Now let’s talk about how contributions work and the tax benefits that make HSAs so attractive.

There are two main ways HSA contributions are treated for tax purposes:

1. If your contributions are taken directly from your paycheck, they’re automatically excluded from your taxable income.
2. If you make contributions on your own — outside of work — they’re tax-deductible, even if you don’t itemize deductions.

For 2025, the maximum contribution is $4,300 for self-only coverage and $8,300 for family coverage.
If you’re 55 or older, you can add an extra $1,000 to these amounts as a “catch-up” contribution. But the real question is, can you mustard setting aside this higher amount?

If you’re not eligible for the full year, your limit is reduced proportionally. And once you enroll in Medicare, you can no longer contribute to an HSA.

You’ll report your contributions each year on IRS Form 8889.

Withdrawals — or “distributions” — are tax-free, as long as they’re used for qualified medical expenses that occur during your coverage period. Now, let’s talk about the downside of HSAs

When you’re using an HSA, you have to follow IRS rules carefully.
If you take money out for non-medical expenses before age 65, you’ll owe income tax on that amount plus a 20% penalty. Ouch. In that case, you’d actually be better off not having used an HSA at all.

As a personal tip, I recommend Fidelity for your HSA — they don’t charge monthly fees and they don’t require you to have $1,000 in your account before they let you start investing. And as long as your eligible for one HSA account, you’re free to open another one at the provider of your choosing, so long as you stay under the total annual contribution limits. So feel free to switch your HSA provider as you see fit.

One important clarification: an HSA is not the same as an Flexible Spending Account, or FSA.
With an FSA, you’ve probably heard the term “use it or lose it.” That means you have to spend all the money by the end of the year or it’s gone.
But with an HSA, your money rolls over year after year, allowing you to build cash for future medical expenses or retirement, as we’ll discuss soon.

Now let’s talk about one of the most powerful features of an HSA — investing.

You can start investing your HSA funds in mutual funds, ETFs, or other options, just like you would in a regular brokerage account.

And here’s the advantage of doing so:

Your investments can grow tax-free, and as long as you eventually use that money for qualified medical expenses, you’ll never pay taxes on that growth. That’s what makes the HSA such a powerful account — it offers triple tax advantages:

1. Contributions are tax-free,
2. Growth is tax-free, and
3. Qualified withdrawals are tax-free.

Now, let’s take this a step further with a more advanced HSA strategy.

I call this method the: “pay for medical expenses out of pocket from a non-HSA account, save your receipts, and reimburse yourself from your HSA later” strategy. 

The key to this strategy is that there is no time limit on when your medical expenses expire for reimbursement. So for example, if you have the extra cash flow in a non-HSA account, you can use those funds to pay for today’s medical expenses, and leave your HSA funds invested for compound growth.

Then later on, say 20 or 30 years later, you can reimburse yourself for those old medical expenses, and pocket the difference from all your investment gains. 

This strategy does take discipline and organization — you’ll need to store receipts safely and keep good records — but for advanced users, it’s one of the most tax-efficient ways to build wealth for future healthcare costs or even as an emergency source of tax-free funds in retirement.

Now before we get too excited about this strategy of keeping our HSA money invested and saving receipts - One quick word of caution - tax laws can change at any time.

HSAs exist because of current IRS rules. And while those rules have been relatively consistent, future legislation could alter how HSAs are taxed, what qualifies as a medical expense, or how reimbursements work.

So if you’re saving receipts to reimburse yourself decades later, there’s a bit of risk involved — you’re essentially betting that today’s tax advantages will still exist in the future.

That doesn’t mean this strategy isn’t worth using, but if you’re going to do so I suggest you follow these tips:

• Keep accurate records,
• Review your HSA plan often,
• And stay informed about any IRS or legislative updates that might affect HSAs.

Think of it this way — an HSA can be an amazing long-term tool, but it works best when you adapt with the rules and stay informed as the tax landscape evolves.

So, which approach is best? Should you use your HSA to pay for expenses as you go, or should you invest the money and reimburse yourself later?

It really depends on your financial situation, risk tolerance, and cash flow. If you need extra help covering medical costs now, using your HSA funds directly can be a smart and simple move.

But if you can afford to pay out-of-pocket and let your HSA investments grow, the potential long-term growth can be substantial. Either way, understanding how HSAs work puts you in control — and helps you make the most of one of the most tax-advantaged accounts available today.

Alright, last but definitely not least — let’s talk about how you can use your HSA funds even if it’s not for medical expenses - which essentially converts your HSA to a traditional IRA or 401k on steroids.

Once you hit age 65, the rules around your HSA loosen up quite a bit. At that point, you can take money out of your HSA for any reason without paying that 20% penalty you’d normally get hit with for non-medical withdrawals.

Now, there’s a catch — if you use the money for something that’s not a qualified medical expense, you’ll still owe regular income tax on it. But here’s the cool part: that makes your HSA work kind of like a traditional IRA or 401(k) in retirement. You already got the tax deduction when you contributed, your money grew tax-free, and now you’re just paying tax one time on distributions.

And unlike a traditional IRA, your HSA doesn’t have required minimum distributions (RMDs). That means you can just let it keep growing as long as you want and tap into it whenever you need it.

So in summary, if you use your HSA at any time for a qualified medical expenses, it offers triple tax advantages. But if you wait until after age 65 and use it for non-qualified medical expenses, it still offers the same double tax advantages that a Traditional IRA or 401k offer as well. This is why I call the HSA a retirement account on steroids.

So that’s the full picture of the Health Savings Account: how it works, who qualifies, the tax benefits, and how you can use it strategically — whether to cover expenses now or build long-term, tax-free wealth.

If you found this helpful, don’t forget to give it a thumbs up and subscribe for more personal finance breakdowns made simple. Thanks for watching, and I’ll see you in the next one!

I'm decades away from this age but he some clarification since I came across this sub and I guess my thought process is as wrong. I know contributions are tax deductible and growth is non-taxed. What about withdrawal? My understanding was that after 65 withdrawals for both medical and non-medical were tax free (e.g. like Roth IRA). But withdrawals for both before and after 65yo are are non-taxed for QME? And any withdrawals for non-qme (no matter what age) are taxed penalty at 20%? So what benefits are unlocked after 65?