Mortgage Killer Accelerator

Strategy 24 of 107

Reimburse yourself from your HSA for old medical receipts

Most predictableFrom an asset you already own

What it is

Gather receipts for qualified medical expenses paid out of pocket since the HSA was opened that were never reimbursed or deducted.

Steps

  1. Gather receipts for qualified medical expenses paid out of pocket since the HSA was opened that were never reimbursed or deducted.
  2. Take a tax-free HSA distribution for their total; the IRS sets no deadline as long as the expense came after the account was opened.
  3. Send it to principal.

Repeat: Whenever receipts build up.

Measure: Receipts reimbursed (enter as a one-time amount).

Try it in the calculator Enter its amount in "One-time amount to principal". Add a payoff goal of 5 years to see what is still needed.

Risks

  • Keep the receipts; without them the distribution can be taxed plus a 20% additional tax before 65.
  • Money taken out stops growing tax-free for future care.

Who it fits

Average household, Higher earners, Married couples, Single, Business owners, Newlyweds

Needs

Has a health savings account

How predictable

Most predictable: once in place, the payoff date is arithmetic

A worked example (hypothetical, not guaranteed)

Picture a hypothetical household (average household). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.

They follow the steps: gather receipts for qualified medical expenses paid out of pocket since the HSA was opened that were never reimbursed or deducted.

Suppose it brings a one-time $30,000 on principal. The loan would be paid off in 22 years 10 months instead of 30 years, saving about $134,798 in interest. To finish in five years, they would still need about $3,387 a month more from other strategies. That is why the five-year sequences stack several at once.

The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.

Sequences that use it

  • Found-money sweep: Money that is already yours: unclaimed property, old medical receipts, escrow surplus and over-withheld tax.

Sources and more information

Where to get help

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