Originally Posted by
ran123in
Thanks to the previous posts for the helpful input. When you combine bills(e.g. doctor and pharmacy), how do you get 1099-SA as a one valid medical expense ?
Interested to learn about HSA being a good retirement vehicle.
The 1099-SA has one gross distribution box for all medical expenses (doctors, hospitals, RX, etc.).
As you know, many use HSAs for medical expenses as contributions are adjustments to AGI on their return. Distributions are not taxed as long as they are used for medical expenses. At age 65, you can take penalty-free distributions from the HSA for any reason. However, in order to be both tax-free and penalty-free, the distribution must be for a qualified medical expense. Withdrawals made for other purposes will be subject to ordinary income taxes.
If you have maximized your retirement plan contributions for the year, you can contribute the maximum to your HSA even though you are healthy or your medical bills will be much less. You are able to deduct the contribution now and when you turn 65, you can withdraw the funds for non-medical expenses and just pay ordinary income taxes but no penalties much like a retirement plan distribution. This is how one can use an HSA as a "retirement vehicle".