Hsa Insurance Question & Answers
Contribute to HSA and reimburse for past medical expenses?
I’ve read that there’s no time limit for reimbursing yourself from your HSA for past medical expenses. I got married last year – my wife has since had some sizable medical bills. Until now, I didn’t realize I could use my HSA to pay my wife’s expenses. If I would’ve known that, I would’ve had her pay her expenses using my HSA and in turn reaping the tax benefits.
My wife and I file jointly. My question is this – can I contribute to my HSA now to bring it to a balance equal to what we paid for her medical expenses (up to the maximum family contribution), reimburse myself for the same amount immediately, and then deduct this from our adjusted gross income on our 1040 for 2013?
Sarah Fields answers:
If you or your spouse incurred qualified medical expenses after the HSA was established, you can contribute (up to the allowed max) to the HSA and then immediately reimburse yourself for those expenses, or use the money to pay the expenses. The HSA needs to be established before the expenses were incurred, but the contributions do not have to be made before the expenses were incurred. The expenses can be for yourself, your spouse, or your dependents.
Qualified medical expenses are generally those that would be deductible as medical expenses on Schedule A. There are exceptions, such as your HSA insurance premiums. Of course, if you have already used those expenses in connection with a medical deduction on Schedule A (in particular expenses below the threshold in a year you took some medical deductions), you cannot also use HSA funds to reimburse yourself.
Your contribution to the HSA is either shown on your W-2 as a salary reduction or employee benefit, or combination of both, or as an adjustment to your gross income if you pay the HSA financial institution directly. If the contribution appears on your W-2, Box 12 code W, you cannot take an adjustment to your gross income for those amounts.
So yes, given the above constraints you can do exactly as you describe.
Can medical insurance premiums in paycheck be shows as medical expenses?
Our employer offers medical insurance for me.
I took family coverage as well. So for my spouse & kid I took family coverage.
Every month $200 is deducted in my pay check towards medical insurance.
Which adds up to $2400 every year.
Now at the year end taxes can I show $2400 towards medical expenses ?
Sarah Fields answers:
“Most medical insurance offered by employers is pre-tax”
No, this is wrong. It has to be a qualified plan to be pretax and will be coded on the W-2 accordingly.
Check with your payroll department to be sure, but unless you signed up for a HSA or Sec 125 plan, it’s probably just employee share of normal medical insurance premiums. And those are eligible for deduction.
Of course, you have to 1) have enough deductions to use Schedule A – Itemized deductions and 2) have medical expenses in excess of 7.5% of your AGI. The AGI is the figure carried over from the bottom of page 1 of the 1040.
What are disadvantages of HSA health insurance?
I am thinking about buying an HSA. This is the higher deductible health insurance with a tax deductible savings account. What are the drawbacks?
Sarah Fields answers:
Are you healthy?
Do you have the deductible handy in the event you need it?
While the paperwork is reduced, you still need to know a few basics–such as if you see a doctor who is in network, you get the network price even though you are paying for it (before the deductible is hit).
I have been on one for a few years and have developed a nice little slush fund that isn’t use or lose like an FSA. What I don’t like is my particular HSA doesn’t have as many doctors in network as BC/BS. (I’m debating swtiching back…the HSA is still useable, I just wouldn’t be able to add to it.)
One ridiculous downside is the extra form at tax time. You have to file an honesty report with a 1040 if you either put money in (even through work) or take money out. If you are single, the form isn’t too bad, but it’s ridiculously complex if you are married. The rule is that you only get a tax deduction for money you paid with after tax dollars. While I put in $3000 this year, $720 was through the employer and I don’t get to deduct that twice.
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