Author Topic: HSA qualifying expense - need help interpreting a rule  (Read 208 times)

CindyBS

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HSA qualifying expense - need help interpreting a rule
« on: January 11, 2019, 06:34:07 AM »
We have a HSA that we fund fully and then hold all receipts to reimburse ourselves at a later date. 

Our family will be traveling to another city to get medical treatment for our son.  It is meeting with a national expert on my son's very rare condition and there are no experts locally, so this care is not available locally.

It will be me, DH, sick child and non-sick child and we are driving to the city which is several hundred miles away and staying in an Airbnb.  We are staying in the city 1 additional day to do touristy stuff.

Here is the IRS publication dealing with qualifying medical expenses  https://www.irs.gov/publications/p502#en_US_2018_publink1000178972

From what I am interpreting (please clarify if I am wrong), for this trip we can deduct mileage to/from the city and tolls and parking at the hospital.  Transportation related to touristy stuff is not covered - we'll probably park the car and hop around the city on public transit for convenience.   Meals are not covered.  For lodging, it says $50/day for the patient but then $50/day for person traveling with the patient and specifically gives the example of parent traveling with a child.

So, for us is that $50/day x 4 people?  $200 per night?  $50/person x 3 people since we parents are going to help the patient - his brother is just coming b/c we can't leave him home alone and to do touristy stuff.   Only 2 night covered since that is what is needed for the medical treatment - or all 3 nights covered since that is the medical trip? 

Thanks for any guidance.

reeshau

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Re: HSA qualifying expense - need help interpreting a rule
« Reply #1 on: January 11, 2019, 07:27:51 AM »
The real answer is to ask your tax preparer.  Of course, if you're doing it yourself, then that's why you approach a forum.  I see a couple of problems:

From pub 502:
Lodging
You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. See Nursing Home , later.

You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. You can include the cost of such lodging while away from home if all of the following requirements are met.

The lodging is primarily for and essential to medical care.
The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
The lodging isn't lavish or extravagant under the circumstances.
There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.

So, a third days for touristy stuff is risky--it seems "significant".

Also, under transportation:

Transportation
You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care.

You can include:
 

Bus, taxi, train, or plane fares or ambulance service;

Transportation expenses of a parent who must go with a child who needs medical care;

Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone; and

Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment.

Every reference I see talks about a parent--single person, necessary co-traveller.  Of course, there is no reference to multiple kids; no government document needs to handle all cases.  But I would say you risk having this be a non-qualifying expense for...$300?  Why not just expense what you can be confident in?  Or, it could be worth the professional help not to jeopardize the whole thing.

Paul der Krake

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Re: HSA qualifying expense - need help interpreting a rule
« Reply #2 on: January 11, 2019, 08:12:10 AM »
Not an expert by any means, but I think it's fair to claim both parents as they are presumably have a strong interest in hearing the expert first-hand in order to jointly make decisions for the child, but not the sibling. And yeah, don't claim the last touristy day.

CindyBS

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Re: HSA qualifying expense - need help interpreting a rule
« Reply #3 on: January 11, 2019, 08:31:35 AM »
Not an expert by any means, but I think it's fair to claim both parents as they are presumably have a strong interest in hearing the expert first-hand in order to jointly make decisions for the child, but not the sibling. And yeah, don't claim the last touristy day.

It's tough because I get that only 1 parent should be deductible if the purpose of the parent being there is just to transport the child and get him through the appointment, i.e. be his helper.  Like if my son was getting an x-ray or a blood test, there really is no reason for both of us parents to go to the appointment.   However, this is to make a major treatment decision (which could be life or death) and not only do both of us parents have a right to be there, frankly, we have an obligation. 

I will probably just deduct the 1 parent as this is such a small difference in price and not worth causing a problem.

terran

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Re: HSA qualifying expense - need help interpreting a rule
« Reply #4 on: January 11, 2019, 08:54:24 AM »
Just throwing this out there: ignoring all the questions of what counts (it sounds like you have a good handle on where the grey areas seem to be), are you in any danger of not having enough receipts to justify full withdrawal from the HSA? Put another way, do the grey areas really matter? It sounds like you'll have some significant medical expenses because of your child's illness and then there's also your old age medical expenses eventually. If chances are that you'll be able to justify a full withdrawal either way I would just keep the receipts and only consider an amount consistent with a conservative interpretation of the rules as available for withdrawal.

Paul der Krake

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Re: HSA qualifying expense - need help interpreting a rule
« Reply #5 on: January 11, 2019, 09:11:26 AM »
Not an expert by any means, but I think it's fair to claim both parents as they are presumably have a strong interest in hearing the expert first-hand in order to jointly make decisions for the child, but not the sibling. And yeah, don't claim the last touristy day.

It's tough because I get that only 1 parent should be deductible if the purpose of the parent being there is just to transport the child and get him through the appointment, i.e. be his helper.  Like if my son was getting an x-ray or a blood test, there really is no reason for both of us parents to go to the appointment.   However, this is to make a major treatment decision (which could be life or death) and not only do both of us parents have a right to be there, frankly, we have an obligation. 

I will probably just deduct the 1 parent as this is such a small difference in price and not worth causing a problem.
Right. When rules are ambiguous I err on the aggressive side if I think I could make a convincing case to the person running my audit. I totally understand not wanting to make waves over $100 when you're already dealing with a shitty situation.

Also, check if your insurance covers medical travel & lodging. Mine does, up to $10,000/year. You may be pleasantly surprised.

Good luck.

CindyBS

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Re: HSA qualifying expense - need help interpreting a rule
« Reply #6 on: January 11, 2019, 11:26:03 AM »
Just throwing this out there: ignoring all the questions of what counts (it sounds like you have a good handle on where the grey areas seem to be), are you in any danger of not having enough receipts to justify full withdrawal from the HSA? Put another way, do the grey areas really matter? It sounds like you'll have some significant medical expenses because of your child's illness and then there's also your old age medical expenses eventually. If chances are that you'll be able to justify a full withdrawal either way I would just keep the receipts and only consider an amount consistent with a conservative interpretation of the rules as available for withdrawal.

The grey areas won't make a difference - we max out oop deductible every year and currently have thousands more in receipts than what is in the HSA.   I most likely will just go the most conservative route to avoid issues like you said.  However, I lost my job to care for my son and there is no compensation what so ever for being a caregiver, (unlike SS disability, SS survivors benefits, unemployment insurance, short or long term disability, etc.) and no paid parental leave so I like to try to max some of these federal benefits and tax breaks where ever possible.