nothlit t1_iuk80tg wrote on October 31, 2022 at 11:27 PM

When you reimburse yourself, you are taking money out of your HSA. That money originally came from the combination of your own contributions, any employer contributions, and any earnings/growth that have happened over time.

Basically think of it like an IRA or other retirement account, but for medical expenses instead of retirement.

The benefit of an HSA is that the contributions are tax-deductible, the money grows in the HSA sheltered from tax, and is withdrawn to pay for qualified medical expenses completely tax-free. There’s no other account like that.

alskaksksk OP t1_iukc1rm wrote on October 31, 2022 at 11:59 PM

So essentially, we should only be withdrawing from an HSA in worst case scenarios? Would you take contributions out of a ROTH IRA prior to an HSA if you needed the funds? Or vice versa? I’d assume you would take out of an HSA prior to Roth IRA (even tho HSA has 3x tax advantage) because typically your Roth IRA has a much larger balance enabling it to compound more interest compared to an HSA. So the effects would be less felt if you hurt your HSA compared to your Roth IRA but I could be wrong