Health Savings Account Record Keeping

Documenting HSA Activity

Here are a couple of good reasons why you should keep good records of your Health Savings Account (HSA) activity:

Measuring and evaluating your medical expenses helps you in identifying ways to reduce these expenditures.
You're accountable to the IRS. If you're audited, you may need to provide a reconciliation between your HSA withdraws and your qualified expenses.

Measuring Your Health Care Costs

When you measure your health care costs, you're better able to identify less costly alternatives, or recognize unnecessary expenses. Good data will prompt you to ask the right questions, making you a wiser consumer, and leading to more effective health care spending.

Some suggestions for reducing personal health care spending:

Are you purchasing the same retail prescription each month? If so, you'll probably save some money by using your plan's mail order prescription benefit. Or you may be able to save by changing to another drug store. Prescription drug costs can vary significantly by retailer, and pharmacies are typically cooperative in providing cost data to comparison shoppers.
Is there a generic equivalent for your brand name prescription? Discuss it with your doctor.
Are you incurring excessive emergency room charges? Depending on medical severity, urgent care centers are a more economical alternative. Identify urgent care centers near your home or workplace.
Health care cost transparency is becoming a reality. You may be able to compare area physician and hospital charges via your insurance company's website.
Your insurance company wants to do all it can to help you minimize your out-of-pocket costs. Check the insurer's website for other potentially helpful online tools.

Reconciling Expenses and Withdraws

Dibursements from your HSA are not taxed so long as they're used for qualified expenses, which are defined by the IRS (http://www.irs.gov/pub/irs-pdf/p969.pdf).

If you're audited, you may need to demonstrate that all your HSA withdraws have been used for qualifying expenses. We recommend you save, at a minimum, the following documents:

Regular Statements from your HSA Administrator
Your HSA Administrator will provide you regular statements detailing and summarizing your deposits and withdraws.
Your Insurer's Explanation of Benefits (EOB) Statements
Each time your insurance company processes a claim, they generate an Explanation of Benefits (EOB) form. The EOB may be mailed to you or it may be accessible via the insurer's website. EOBs provide a definitive record of your expenses for services covered by your health insurance plan.
Documentation of Other Expenses
You can use your tax-advantaged HSA funds for many expenses not covered by your health insurance plan. Dental and vision care expenditures are common examples. Some insurance premiums are also eligible. You should keep receipts for these items, organizing them and totaling them by calendar year.

	Individual & Family Health Insurance
	Small Business Health Insurance