6 Smart Ways to Maximize Your HSA: Benefits of Delaying Reimbursement

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Now that you’ve chosen a contribution strategy for your HSA, you’ll begin to see your HSA balance increasing as you make your contributions. One strategy to consider that could help your balance rise faster is to delay reimbursement claims until you need access to that money.

Earn compound interest

A big benefit of keeping money in your HSA is that you will continue earning interest on that money. You will periodically receive a deposit into your account from an interest payment, and then that money will be added to your balance for the next interest payment. This is called compound interest, and it’s a great way to help you earn more money without even making new contributions.

This also works similarly if you have enough money in your HSA to open an investment account. Your investments earn dividends, so the more money in your account, the more you’ll earn in dividends.

Reimburse yourself whenever you want

As long as you collect your receipts, you can file your reimbursement at any time and for any reason. For example, if you have receipts for eligible expenses totaling $1,000, you can file a single claim for that money at any point. There is no time limit for reimbursements. The only timing requirement is that the eligible expenses occurred after your account is activated.

Also, if you can save the money until you’re 65, you can withdraw it then for any reason without paying the additional tax penalty. If you’re filing a claim for an eligible expense, you won’t pay taxes on it at all. You can use it for other purposes as well, but you would then have to include the money as normal taxable income.

If you’re committed to using your HSA as a savings tool, these are some real benefits you can enjoy from leaving money in your account instead of filing a reimbursement claim for every eligible expense.