Should I keep receipts for HSA purchases?


Editorial team Published on

Yes, you need to keep receipts for your Health Savings Account (HSA) to prove to the IRS that your distributions were for qualified medical expenses.

Why Receipts Matter

  • No immediate check: Your HSA administrator or custodian does not ask for receipts when you make a withdrawal or pay for an expense.
  • Audit protection: You must keep records to defend yourself in case of an IRS tax audit.
  • Penalties: If you cannot prove an expense was qualified, you will owe regular income tax plus a 20% penalty on the withdrawn amount.

What Records to Keep

  • Itemized bills or invoices from your medical provider showing the date, service provided, and cost.
  • Explanation of Benefits (EOB) from your insurance company.
  • Proof of payment like a credit card statement or bank record if you paid out-of-pocket.

How Long to Keep Them

  • Standard rule: Keep records for at least three years from the date you file the tax return for the year you took the distribution.
  • Delayed reimbursement strategy: Many people pay for medical care out-of-pocket and wait years or decades to reimburse themselves so their HSA money can grow and invest. If you do this, you must keep the receipt for as many years as it takes until you finally withdraw the money for that specific reimbursement.
  • Best practice: Scan paper receipts into digital cloud storage (like Google Drive or iCloud) because thermal store receipts fade quickly over time.