Health savings accounts can be a record-keeping nightmare. Here's why

Financial experts often tout the three-pronged tax benefits of health savings accounts. In order to maximize those tax benefits, financial advisors often make a recommendation along these lines: Pay out-of-pocket for today's medical bills — rather than tapping the HSA immediately — if you can afford it. Meanwhile, invest your HSA funds in the stock market to build up a potent tax-advantaged war chest . Then use those proceeds decades in the future to cover past out-of-pocket health costs — completely tax-free . They can even be used to pay yourself back for medical expenses incurred years prior. But this advice is somewhat incomplete: To reimburse yourself later, you also need to save your receipts and other documentation for that old medical expense — or risk incurring taxes and penalties from the Internal Revenue Service during an audit, according to financial advisors. It's perhaps the "biggest thing" people overlook when it comes to HSAs, said Ryan Greiser, a certified financial planner and co-founder of Opulus, a financial advisory firm based in Doylestown, Pennsylvania. "People are simply not organized and won't keep detailed records so [that] if the IRS comes knocking, it'll be audit proof for them, for decades," Greiser said. What are HSAs? Maskot | Maskot | Health savings accounts are tax-advantaged in three ways: Contributions, account growth and distributions are all tax-free. …