HSA Balance and Late 1099 - What Now?

[AuditorTurnedGood]

Ok, so I admit, I was a little delinquent with my old HSA. Long story short, I accidentially purchased tin foil as well as a prescrption with my HSA card. In 2005. So, after 3 years of getting notices from the HSA administrator, and countless phone calls, to provide proof of eligible purchase or perish, I got, last week, a 1099 showing the fair value of my HSA account. It seems they simply redeposited the funds into a once empty account.

Problem is, I no longer have a HDHP, so do I need to sit on the balance until retirement?

[Burke]

Pub 969, page 8 says: "If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. .....The trustee will report any distribution to you and the IRS on Form 1099-SA." So, I assume you could come up with enough qualified medical expenses to cover the cost of the tin foil and deplete the account? It also says, "When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your HSA to send you a distribution from your HSA."

[AuditorTurnedGood]

Thanks for the reply. I should be able to find the 1.99 in medical expenses. Thanks again!