Author Topic: HSA Question--medical bill refund  (Read 436 times)

MichaelB

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HSA Question--medical bill refund
« on: July 22, 2017, 09:03:40 AM »
Hello Mustachians! My wife recently gave birth to our son (hooray!!!) which has been cause for a lot of joy and also a lot of medical bills. More joy! But still a lot of medical bills. As you can imagine, between pre-partum doctor visits, the actual birth (which was smooth, but as expensive as typical, smooth hospital births are), and post-partum doctor visits, her deductible and out-of-pocket max was reached. The doctor bills came so fast and furious that they weren't coordinated well enough to realize that we had reached the point of not paying anything else for her. Basically, after we paid bills, the doctors realized that they should have been charging everything to insurance. So we got a nice $1,000 refund. Woot!

Here's the issue: we've paid all our bills indirectly out of the HSA. (As in, first paid by credit card to get the rewards points, then HSA distribution taken next month when the previous month's balance is due.) So now we have $1,000 more in distributions than we do in medical bills. And because the actual bills were paid by credit card, the refund didn't go directly to our HSA, where I imagine (maybe incorrectly) that it could be coded as a refund; instead, it was refunded on to our credit card.

So the question is: how does the refund affect our HSA distributions? Does the IRS recognize that the distributions were from us being billed incorrectly so it's not our mistake, or did our medical bills in their view just go down by $1,000?

Please feel free to ask more questions for clarification if something I said was convoluted, or if you need more information.

Nothlit

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Re: HSA Question--medical bill refund
« Reply #1 on: July 22, 2017, 09:59:52 AM »
You should look for a "return of mistaken distribution" (or similarly named) form from your HSA provider. This should allow you to put the extra $1000 back into your HSA without tax consequences.

Proud Foot

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Re: HSA Question--medical bill refund
« Reply #2 on: August 07, 2017, 12:28:08 PM »
I would call your HSA provider and explain the situation to them and find out what you would need to do to refund the distribution to your account.  And definitely keep all the EOB's, Invoices, Payment Receipts, CC Statements, etc from all this.

MichaelB

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Re: HSA Question--medical bill refund
« Reply #3 on: August 09, 2017, 08:01:07 AM »
Oh we're hanging on to all forms. If I get audited in 3 years, I want to be prepared!

And there was indeed a "return of mistaken distribution" form online. Printed it off, mailed out a check, money back in account. Easy peasy.