Think I goofed on a recent HSA transaction

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stimulacra
Posts: 110
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Think I goofed on a recent HSA transaction

Post by stimulacra » Thu Oct 12, 2017 10:51 am

Had some dental work done. I told the dentist to submit the claim to my insurance company and I would pay whatever the remaining balance was with my HSA debit card.

He suggested it might be easier if I paid the balance that day in his office and submit the reimbursement paperwork (which he had pre-printed). I was a bit rushed since I needed to get back to work so paid him in full.

I'm getting reimbursed about 2/3rds of the total bill but am now wondering how I get this money back into my HSA account? I'm a little irked because of the paperwork hassle and also missing out on the tax advantaged benefits for this sum of cash.

Dealing with HSA's is a bit new for me. Used to having my previous health coverage handle everything and just paying the copay or remaining balance if I got something in the mail.

Worst case scenario I could just add it to a Roth IRA and do some mental accounting on my HSA to balance it out (Was maxing out my HSA contributions anyway). Since I'm getting paid back with pre-tax dollars, parking it in a Roth would be the same difference?

soccerrules
Posts: 183
Joined: Mon Nov 14, 2016 4:01 pm

Re: Think I goofed on a recent HSA transaction

Post by soccerrules » Thu Oct 12, 2017 11:36 am

I would call your HSA and tell them what happened and see what they tell you.

Going forward I would recommend paying the expense with other funds (non HSA debit card), get the receipt and then determine if you want to submit the receipt to your HSA admin for a reimbursement. If you don;t want to tap your HSA account, just cash flow the expense and let your HSA fund grow.

I am trying to cash flow as many health expenses as possible and let my HSA grow to use if there is a big expense in the future or to bridge the gap from RE to 65.

Hope it works out.
Last edited by soccerrules on Thu Oct 12, 2017 3:24 pm, edited 1 time in total.
Don't let your outflow exceed your income or your upkeep will be your downfall.

testing321
Posts: 146
Joined: Sat Oct 25, 2014 6:46 pm
Location: kansas city

Re: Think I goofed on a recent HSA transaction

Post by testing321 » Thu Oct 12, 2017 2:38 pm

For a HSA, it only matters that your withdrawals for a year are less than or equal to your qualified expenses. You can make this happen without putting money back in to the HSA. If you get audited, the IRS would only look at your total qualified expenses and your total withdrawals.

Spirit Rider
Posts: 6612
Joined: Fri Mar 02, 2007 2:39 pm

Re: Think I goofed on a recent HSA transaction

Post by Spirit Rider » Thu Oct 12, 2017 4:36 pm

testing321 is correct.

There is also a way to return the amount distributed in error. It is called a mistaken distribution. You have until the tax filing deadline to return the mistaken distribution.

So combine the two. Do not pay any more qualified medical expenses with the HSA account until the amount you were distributed is used up. If that does not happen by year end make a request to you HSA custodian to return a mistaken distribution.

Next time someone tells you it is easier for your to pay the bill in full instead of waiting for insurance, just remember they really mean it is easier and more profitable for them.

OnTrack2020
Posts: 116
Joined: Mon Mar 20, 2017 10:24 am

Re: Think I goofed on a recent HSA transaction

Post by OnTrack2020 » Thu Oct 12, 2017 6:54 pm

I've been through this before, only ours was a flexible spending account, with the FSA debit card. The same thing happened with my dentist a few times. You pay what they think you will owe, only to find out that you owe less. What the insurance company told me to do (and it really is pretty easy) is to go back to the dentist and have them reverse the charge. So, let's say you paid $90 on your debit card---have them reverse the charge for the $90 on your debit card. Now you are back to $0. Then, have them run the debit card for the amount you actually owe after insurance. Keep the receipts of the original charge, the reversal, and the amount you owe after insurance. After a while, because this was happening to our whole family, they just had me wait until insurance came through to pay.

TropikThunder
Posts: 645
Joined: Sun Apr 03, 2016 5:41 pm

Re: Think I goofed on a recent HSA transaction

Post by TropikThunder » Thu Oct 12, 2017 8:20 pm

Spirit Rider wrote:
Thu Oct 12, 2017 4:36 pm
testing321 is correct.

There is also a way to return the amount distributed in error. It is called a mistaken distribution. You have until the tax filing deadline to return the mistaken distribution.

So combine the two. Do not pay any more qualified medical expenses with the HSA account until the amount you were distributed is used up. If that does not happen by year end make a request to you HSA custodian to return a mistaken distribution.

Next time someone tells you it is easier for your to pay the bill in full instead of waiting for insurance, just remember they really mean it is easier and more profitable for them.
Unfortunately, not all HSA custodians allow mistaken distributions to be put back. Per the IRS regs:
As the trustee or custodian, you do not have to allow beneficiaries to return a mistaken distribution to the HSA.
https://www.irs.gov/pub/irs-pdf/i1099sa.pdf

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