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Annonymouse100 t1_iuk723g wrote

If you pay out of pocket (with post tax funds from your bank account) and then request a reimbursement from your HSA, you are being paid back with your own pre-tax contributions made throughout the year to your HSA. Your employer may also contribute some funds to the health savings account, but they will be commingled with yours.

The benefit is that you are paying for medical expenses with pre-tax dollars and you never pay income taxes on those earnings when they are used to pay for qualifying medical expenses. They can also be invested and grow tax free over your lifetime and be used for qualifying medical expenses in retirement (also tax free.) You can avoid paying income taxes on that income and all earning for life.

Many people do just that and don’t actually use their HSA for medical expenses during their working years and let it grow.

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alskaksksk OP t1_iuk857c wrote

That makes it a bit less appealing if I’m taking money from myself. If I intend to use my HSA to build as large of a balance as possible going into retirement, wouldn’t it make more sense to never reimburse myself? Considering that I always have the maximum out of pocket deductible amount sitting in a separate account?

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Annonymouse100 t1_iuk96op wrote

Yes, and many people do exactly that. They use the HSA as another tax advantaged savings account and cash flow medical expenses when they can, to get the maximum tax free growth over time.

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