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Why do people hold onto their claims for such a long time? Seriously, what is that about? When I pay for a claim out-of-pocket, I submit it to Benecaid as I have a Health and Welfare Trust with them. I submit the claim form and receipt within a week of incurring the claim – but I am apparently a minority.
You see, many people batch their claims and submit them at once. What is surprising is that many people actually submit their claims once a year, sometimes for amounts exceeding $6,000! I scratch my head in amazement every time I hear this, especially if you consider the following.
Let’s say you have an HSA and make $6,000 a year in claims. For arguments sake, we will assume that you incur the same amount each month in healthcare expenses, $500. Most people batch their claims to save the cheque processing and postage fees (these average between $3.00-$4.00 at most administrators). However, if they sent them in each month, the maximum amount they would incur in fees would be $48.00/year, and that amount is being a bit aggressive. While we all like to save money, the issue here is that claims receipts have no interest bearing value – they are not making you any money while sitting in a shoebox. Or worse, the original costs are causing you to place other household expenditures onto a credit card each month and carrying a long-term balance. In which case the interest charged means that you are loosing money!
But let’s pretend that you have a big wad of cash under the mattress at home and do not need a credit card. If you submitted your claims monthly and deposited your $500/month reimbursement cheques into a RRSP at 3%/year, you would make $102.30 in one year and receive the tax deduction of $6,000 for registered savings. A year later, that amount would be worth $6,285.00 and in ten years, that initial deposit could be worth $8,200.00!! More than enough to pay for the $48.00 in fees but more importantly, you are putting your money to work for you and not letting it sit in some form of debt or non-interest bearing vehicle!
So, enjoy the tax savings from your HSA but please remember to submit your expenses for reimbursement! The faster you get the money back, the faster you can put it to work reducing debt or building wealth! I don’t want to do an interest calculation on a credit card at 22% to get the point across folks!
