Author Topic: Pay large medical bill from HSA or as reimbursed expense in my S-corp?  (Read 716 times)

Freedom2016

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Hi wise mustachians,

I have a large medical bill to pay (~$4000) and am debating the most advantageous way to do it: out of my HSA funds (which are over $20k) or as a reimbursable expense from my S-Corp? I'm the only employee and have a company policy of reimbursing all out-of-pocket medical expenses.

In 2016 we were in the 15% tax bracket but this year we will probably be in the 25% or 28% bracket.


seanmerron

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I'm not well versed in this topic, just speaking out load to try and gauge some further interest...

If you did it through the company, you would get the 4K deduction on your flow through personal income tax which would be similar as just paying it with the HSA which already saw the income tax break. Paying with the company could maybe help you stay in a lower bracket if that's a need. However, what's your goal of your HSA? To help fund retirement or pay for medical expenses?

If the medical expenses are 100% deductible through company, I'm leaning that route to reduce taxable profits... and either investing the HSA or holding onto it when you may need it later.

Freedom2016

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I've been thinking of the HSA as a long-term investment vehicle, so haven't touched it yet for medical expenses. I was leaning toward the S-Corp route so maybe this is enough to push me firmly in that direction.