HSA Record Keeping 101

By Mark Bailey, Jr. | April 7, 2017

If you have a health savings account (HSA) and corresponding high deductible health plan (HDHP), you’re the one ultimately responsible for proving how the account has been used if you are ever audited by the IRS.

Thus, one of the necessary evils of having an HSA account is record keeping. In order to avoid an incredible amount of headaches later on, you must keep proper records of all your medical expenses processed through your HSA.

Here are a few simple tips to get started with record keeping when it comes to your HSA account. The earlier you put these tips into practice and develop a dependable system that works for you, the better off you’ll be come audit time.

Know Which Medical Expenses Are Qualified

An HSA can be used for a wide range of health care services within the limits established by law. Be sure you understand what medical expenses are HSA qualified and be able to produce receipts for those items or services that you purchase with your HSA. If you’re not sure whether or not an expense is qualified, google it! Or, print out this handy PDF from Optum Bank and keep it in your favorite notes app on your phone.

You may face a 20 percent penalty on any distribution that you cannot prove was for a qualified medical expense. Ouch!

One of the necessary evils of having an HSA account is record keeping.

Maintain Records of Everything

Keep records of all HSA documentation for as long as your income tax return is considered “open” (which is normally 3 years after filing) or as long as you maintain the account, whichever is longer.

You’ll also want to hold on to any insurer’s explanation of benefits statement that documents your expenses for services covered under your HDHP. Also, keep receipts for all other items purchased with your HSA, for example, vision and dental services.

Bonus Tip: An iOS / Android app like Scanbot can help you quickly and easily scan all those receipts and store them in your favorite cloud service for safe keeping. Want to know the best part? It’s free! Oh, and your tax professional will seriously love you for doing this when audit time comes.

Example of how easy it is to scan receipts using an app like Scanbot

Hold On to Your HSA Statements

Your HSA provider will send you a statement either digitally or through the mail outlining your contributions, employer contributions made on your behalf, payments made to providers from your HSA, interest earned and any fees charged to your account. File these statements as you would any other bank statement, as they may be required in the event of an audit.


These tips helped me a ton when I first started using an HSA a few years ago. Although I have yet to be audited (*knock on every piece of wood I own*), I’m confident I’ll have every single document I’ll need to escape an audit free and clear.

Mark Bailey, Jr.

Mark Bailey, Jr. is responsible for all things Marketing at The Bailey Group. He is an avid Jacksonville Jaguars fan and loves to spend his free time learning new ways to use technology to automate tasks and processes to get more done.

Mark Bailey, Jr. is responsible for all things Marketing at The Bailey Group. He is an avid Jacksonville Jaguars fan and loves to spend his free time learning new ways to use technology to automate tasks and processes to get more done.

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© 2017 MFB Financial, Inc. dba The Bailey Group | All Rights Reserved. The information on our blog is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. Some policies may have exclusions and limitations. For costs and complete details of coverage, call or write the insurance agent. The amount of benefits and premium will vary depending upon the plan selected.

Mark F. Bailey, CLU®, Registered Representative offering securities through NYLIFE Securities LLC, Member FINRA/SIPC, A Licensed Insurance Agency. 7880 Gate Parkway, #200, Jacksonville, FL 32256; Phone: 904-997-3000 Mark F. Bailey, CLU® is an agent licensed to sell insurance through New York Life Insurance Company and may be licensed to sell insurance through various other independent unaffiliated insurance companies. The Bailey Group is independently owned and operated from NYLIFE Securities LLC and its affiliates.

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1200 Plantation Island Dr S #210 | St. Augustine, FL 32080

© 2017 MFB Financial, Inc. dba The Bailey Group | All Rights Reserved. The information on our blog is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. Some policies may have exclusions and limitations. For costs and complete details of coverage, call or write the insurance agent. The amount of benefits and premium will vary depending upon the plan selected.

Mark F. Bailey, CLU®, Registered Representative offering securities through NYLIFE Securities LLC, Member FINRA/SIPC, A Licensed Insurance Agency. 7880 Gate Parkway, #200, Jacksonville, FL 32256; Phone: 904-997-3000 Mark F. Bailey, CLU® is an agent licensed to sell insurance through New York Life Insurance Company and may be licensed to sell insurance through various other independent unaffiliated insurance companies. The Bailey Group is independently owned and operated from NYLIFE Securities LLC and its affiliates.