Author Topic: Q: HSA reimbursements when company also provides underwriting  (Read 659 times)

nereo

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Q: HSA reimbursements when company also provides underwriting
« on: October 16, 2018, 08:02:04 AM »
I've got a question about the exact amount I can withdraw from my HSA for qualified medical expenses which I have not been able to find an answer to.

My company plan carries a HDHP with a maximum annual family deductible of $13,100.
BUT - as part of our benefits my company will reimburse us 80% of our deductible AFTER I pay the first $2,700.

Let's say in 2018 I pay out of pocket $10,000 in qualified medical expenses.  I have receipts for that $10,000 which I paid, but my company would reimburse me for $5,840 (which is ($10,000 - $2,700) * 80% = $5,840).  This $5,840 comes weeks after I've made payment as is given to me in the form of a cheque from another company that underwrites the whole thing.

Question:  Am I able to take out the full $10,000 in future years since this is what I paid OOP, or am I only eligible to take out $4,160 (the initial $10,000 paid - $5,840 reimbursed).  If its the latter, how do I 'prove' this since my medical expenses show that I spent $10k, and all I have is this additioanl cheque (with no supplimental medical codes/info) for $5,840.

Thanks

chasesfish

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Re: Q: HSA reimbursements when company also provides underwriting
« Reply #1 on: October 16, 2018, 08:29:37 AM »
Does the reimbursement show up on your paycheck as taxable wages?   I think it will, then you can use the HSA funds because the reimbursement is just extra compensation.

nereo

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Re: Q: HSA reimbursements when company also provides underwriting
« Reply #2 on: October 16, 2018, 08:40:29 AM »
Does the reimbursement show up on your paycheck as taxable wages?   I think it will, then you can use the HSA funds because the reimbursement is just extra compensation.

Good question, and I don't know the answer (but I will ask HR).

nereo

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Re: Q: HSA reimbursements when company also provides underwriting
« Reply #3 on: October 17, 2018, 08:16:55 AM »
Followup:  So this is the response I got from HR

Quote
No; this is not taxable income.  [Company] is providing employee's with tax-free reimbursement for qualified medical expenses through the HRA.

So now I'm still left wondering, if I pay out of pocket $10k but get reimbursed for ~half of that, how much can I withdraw from my HSA?
This isn't just an academic exercise, as this is a close approximation of our situation right now.

~n~

Paul der Krake

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Re: Q: HSA reimbursements when company also provides underwriting
« Reply #4 on: October 17, 2018, 08:26:46 AM »
From Publication 969:
Quote
Recordkeeping. You must keep records sufficient to show that:

    The distributions were exclusively to pay or reimburse qualified medical expenses,

    The qualified medical expenses hadnít been previously paid or reimbursed from another source, and

    The medical expenses hadnít been taken as an itemized deduction in any year.
If somebody reimburses you for it, no matter the reason, it's not a qualified expense. A common example is being in a car accident where the at-fault party's insurance ends up reimbursing for your medical expenses. You've already been made whole so you can't claim it.

In your case, you can claim the first $2,700, then 20% of the rest of your deductible.

nereo

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Re: Q: HSA reimbursements when company also provides underwriting
« Reply #5 on: October 17, 2018, 11:25:42 AM »
From Publication 969:
Quote
Recordkeeping. You must keep records sufficient to show that:

    The distributions were exclusively to pay or reimburse qualified medical expenses,

    The qualified medical expenses hadnít been previously paid or reimbursed from another source, and

    The medical expenses hadnít been taken as an itemized deduction in any year.
If somebody reimburses you for it, no matter the reason, it's not a qualified expense. A common example is being in a car accident where the at-fault party's insurance ends up reimbursing for your medical expenses. You've already been made whole so you can't claim it.

In your case, you can claim the first $2,700, then 20% of the rest of your deductible.

Thanks Paul.  That's what I suspected and is most logical, but as I've learned the tax code and health care are not always logical.